Financial inclusion is key driver in the growth of entrepreneurship culture in an industry or
nation. To start this essay, first it is important to define what financial inclusion is, financial
inclusion is defined as the equal opportunity and availability for all to access services related to
finances. The process this refers to include the ability of an individual or a business to access
timely, affordable, and appropriate financial services and products such as proper banking,
readily available loans, equity policies and insurance products.
Once the definition of financial inclusion is established I would like to take under reference an
article called “Financial Inclusion, Entry Barriers, and Entrepreneurship: Evidence from China by
Zhaobin Fan * and Ruohan Zhang” and using their research and finding start off by fully agreeing with
the statement that yes, financial inclusion is more likely to benefit the formation of entrepreneurs in
various sectors with lower barriers to entry. In this research the finding conclude that thorough financial
inclusion can help in mitigating these three problems:
1. Credit Constraints on entrepreneurs.
2. Reduce asymmetrical financial transactions.
3. Availability of initial funding.
The research also indicated through various models that development of financial inclusion
benefits aspiring entrepreneurs in the sectors with lower barriers to entry the most.
Furthermore, sectors with low barriers to entry are usually not very capital intensive to enter,
therefore with proper financial inclusion may entrepreneurs who are unable to generate or
raise capital through venture capitalists or angel investors can easily use financial instruments
and services like loans to start their venture, make a solid proof of concept and then pitch a
refined, market tested version of their business to venture capitalists and receive large funding.
Adding to this, financial inclusion expedites the innovation process as the initial funds required
by an entrepreneur to make and test prototypes will be readily available to them. Sectors with
low barriers to entry usually require small amounts of innovation, therefore entrepreneurs can
use the financing acquired through banks to make the MVP of their product and incrementally
innovate as they move forward.
Another benefit of financial inclusion is the availability of insurance, which helps in minimizing
operational risks of operating an entrepreneurial venture.
Lastly, development of financial inclusion will encourage more entrepreneurs to emerge,
especially in the low barrier to entry sector, because external pooled funding is usually limited
whereas loans are available to a larger audience and young budding entrepreneurs find the
concept of pitching and acquiring funds tedious in the beginning, therefore with loans being
available they will be able start their ventures easily and later scale as they mature.