On social inequality, financial inclusion, and poverty at the bottom of the pyramid: Is financial equity enough?

Researchers worldwide are looking for ways to positively impact those afflicted by poverty at the socioeconomic bottom of the pyramid (BOP). It has been suggested that one of the critical pathways to poverty alleviation is through initiatives that encourage financial inclusion. Such inclusion is often seen as “leveling the playing field” by encouraging savings, entrepreneurship, and creating other related avenues for production and consumption. Yet, many programs targeting the BOP demonstrate limited utilization among the intended beneficiaries. In the current study, we discuss this issue with a specific focus on entrenched social stratification – the view that some communities are inherently superior or inferior based on birth. The current study examines whether social disadvantage – being on the low end of the social stratification continuum – influences the impact that financial inclusion has on access to sanitation, clean energy, and clean fuel. We ask: if one is considered “unequal” or “inferior” to start with, does this lead to subsequent challenges even after one achieves economic equity? Based on a field study, we identify limitations on how effectively financial inclusion and equity can address the challenges faced by the BOP. We conclude that existing social inequality may be at least partially disconnected from the effects of financial inclusion on poverty. Consequently, financial inclusion by itself cannot ensure poverty alleviation, as it may fail to address the deeply rooted social stratification prevalent at the BOP.