March 12, 2025, by aczht

Financial inclusion, literacy and poverty in Brazil – Professor Meryem Duygun

The Inclusive Financial Technology Hub (INFINITY) at the University of Nottingham was established in partnership with the Universities of Birmingham and Warwick to bridge the gap between university research and the financial services sector. The hub aims to maintain a continuous pipeline of financial technology research and facilitate the application of cutting-edge research to develop the next generation of financial products and services for consumers and businesses.

Professor Meryem Duygun, Co-Director of INFINITY and Professor of Banking and Finance at Nottingham University Business School, holds the Aviva Chair in Risk and Insurance. She has been recognised for her contributions to financial technology, having been named to the Women in FinTech Powerlist in 2020, 2022, and 2023 and 2024.

Meryem’s research focuses on financial inclusion, literacy, and poverty, particularly in China, Brazil and India. Her work highlights the evolving nature of financial accessibility and its broader socio-economic impacts.

Why Financial Inclusion Matters

The United Nations identifies financial inclusion as a key instrument for reducing poverty and encouraging prosperity. Individuals and businesses can better navigate financial challenges and build resilience by ensuring access to appropriate financial products. Increased access to finance stimulates entrepreneurship, investment, and overall economic growth. This aligns with the Sustainable Development Goals, promoting decent work, economic growth, health, and well-being. The urgency of financial inclusion efforts is clear – without intervention, 575 million people will remain in extreme poverty, particularly in low-income countries.

The evolution of financial inclusion research

Research on financial inclusion has evolved through three distinct phases.

• Early research: Initially, the focus was on poverty traps and limited banking access, constrained by a lack of granular data.
• Expanded scope: Over time, the scope broadened to include geographical barriers, credit availability, and the impact of financial liberalization.
• Behavioural economics integration: Research has recently incorporated behavioural economics, examining how factors like present bias and intra-household conflicts affect financial decisions alongside traditional barriers like banking fees and documentation requirements.

Brazil’s financial inclusion journey

Brazil has made substantial progress in expanding financial inclusion;

2001: The journey began with the introduction of Banco Postal

2003: The authorization of banking correspondents significantly increases access to financial services.

2004: Launch of the Banks for All programme leading to a surge in new accounts

2010: The expansion of banking correspondents increased access in remote areas.

Despite these efforts, a significant portion of the population remained unbanked until the advent of digital solutions like PIX and the Caixa Tem app, which facilitated widespread financial inclusion.

Challenges and opportunities

Despite these advancements, Brazil continues to face challenges with low financial literacy scores and high levels of bad credit and gambling. The gap between awareness of basic and complex financial products highlights the need for targeted education and literacy programmes. These programmes are crucial to ensuring that increased access to financial services translates into tangible improvements in financial well-being. Our research aims to quantify the impact of financial inclusion on poverty, evaluate public policies, and analyze the influence of financial education on decision-making.

Research insights and findings

Using comprehensive datasets covering 27 Brazilian provinces from 2012 to 2023, our research integrates data from various sources to offer a holistic perspective on financial inclusion, literacy, and poverty. Using a multivariate regression model, we systematically examine the relationships between key variables, analyzing the direct and indirect effects of financial inclusion and literacy on financial fragility and poverty.

The empirical results of our project reveal a complex relationship between financial literacy and poverty.

Key findings:

• Higher financial literacy does not always correlate with lower poverty levels.
• Increased credit access can exacerbate financial vulnerability if not properly managed.
• Demographic factors such as age distribution and unemployment rates significantly influence poverty levels.

Contrary to conventional wisdom, our research indicates that financial education alone cannot alleviate poverty. Instead, strategic policy interventions and responsible financial product design are necessary to drive meaningful change.

Collaboration and policy impact

To maximize the impact of our research, we initiated strategic collaborations with the Brazilian Ministry of Economy, the Central Bank of Brazil, and Caixa Econômica Federal. These partnerships will facilitate the development of evidence-based policies and programmes to enhance financial inclusion and alleviate poverty in Brazil.

Further information

This research has been conducted in collaboration with prominent researchers from Brazil and the UK: Vinicius Dezem (Universidade Federal de Santa Catarina (UFSC)), Dr Linh Nguyen and Professor Sanjay Banerji (Nottingham University Business School) and Professor Mohamed Shaban (University of Leicester)

This research is funded by the University of Nottingham International Research Collaboration Fund.

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