Decentralized finance in the developing world: the end of the financial inclusion gap?

Abstract

As of 2021, 1.4 billion persons remain financially excluded. Paradoxically, in recent years, the financial industry has experienced deep digitization, allowing for faster, more secure, and cheaper financial products as well as new organizations, such as fintech and digital banks capable of providing financial services to millions. Additionally, the surge of cryptocurrencies supported by decentralized ledger technologies gave way to a new financial paradigm, namely decentralized finance, with powerful characteristics to leapfrog the unbanked and insert them into open financial systems. This research adds to the study of decentralized finance as a gateway for financial inclusion in the developing world providing a comparative analysis of historic cases in which financial innovations had different results depending on institutional and socioeconomic considerations that shape behavior and influence the impact of financial inclusion.