Bridging the Implementation Gap: Institutional Logics and Employee Awareness in Afghanistan's Financial Inclusion Agenda

Shujaullah Khwajazada and Remya Ramachandran

Economic Notes, 2026, vol. 55, issue 2

Abstract: This study examines why Afghanistan's financial inclusion agenda consistently fails at the point of implementation, despite strong policy commitments and global support. Moving beyond conventional explanations that attribute failure to macro‐level constraints, the research investigates how institutional conflict and frontline discretion interact to shape outcomes within the banking sector. Using an integrated framework that brings together Institutional Theory, the Technology‐Organization‐Environment (TOE) model and Street‐Level Bureaucracy, the study draws on semi‐structured interviews with mid‐ and senior‐level banking professionals and policymakers. The findings reveal that Afghanistan's hostile TOE environment—marked by insecurity, infrastructural weakness and regulatory fragility—creates powerful commercial and security logics inside banks that overshadow policymakers' developmental logic. This misalignment produces what appears to be an ‘employee awareness gap’, but the study reframes this as a rational discretionary response by frontline staff navigating conflicting institutional priorities and personal risk. Ultimately, the implementation gap emerges not from poor training or weak will, but from unresolved institutional tensions processed through everyday banking practice. The study contributes a novel multi‐level explanation for policy failure in fragile contexts and offers practical guidance for designing financial inclusion strategies that align with institutional realities and the lived experiences of implementers.

Date: 2026
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