Design Options for a Sustainable Financial Sector: Lessons from Inclusive Banking Experiments

UN Environment Inquiry

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Abstract: Over 200 years ago, Adam Smith put forward the notion that individuals seeking to benefit themselves through trade were led as if by an invisible hand to a situation in which society as a whole could benefit. It can be argued, however, that social objectives such as sustainability and inclusiveness, do not emerge spontaneously through market forces. Such outcomes have to be designed through legal structures and institutions. In other words, for the invisible hand to operate, there needs to be a visible hand behind it. By reviewing the financial inclusion experiments in South Africa and Kenya, this working paper provides some lessons for the design of the type of financial sector required for the transition from greed to green.