In this paper, we develop a dynamic general equilibrium model, where agents are heterogeneous in terms of wealth and entrepreneurial talent, to study the effects of financial inclusion. From our structural analytical framework, we obtain some important properties, which are helpful to understand the effect of financial inclusion in capital allocation and poverty reduction. On the basis of this framework, one could make a quantitative evaluation of the policy impact of financial inclusion by calibrating the model with data of different countries.
Keywords: Financial Inclusion, Poverty Alleviation, General Equilibrium, Financial Friction
ISSN: 1792-6599 (Online)