Facilitating market development to advance financial inclusion

This paper presents a market development approach to supporting the development of financial markets characterised by multi-pronged donor interventions that are coordinated, catalytic and responsive to the market. It also discusses the role of a market facilitator in ensuring market responsiveness and presents several areas critical to building financial markets that work for the poor such as information, capacity building, incentives, and a well-designed enabling environment.

Conclusions include:

• market development occurs through a variety of inter-related ways: by encouraging change in behaviour through capacity building; by helping market actors to take more informed decisions through access to better and timely information; by incentivising innovation through better-informed risk assessment and creation of a favourable enabling environment; 
• for facilitation to be effective it requires independent facilitator(s) that can use light-touch interventions such as research to catalyze market action.