Financial Inclusion, Credit Booms, and Financial Stability Risk

Adolfo Barajas, Kensuke Sakamoto and Rasool Zandvakil

No 2026/008, IMF Working Papers from International Monetary Fund

Abstract: Economic benefits of financial inclusion, meaning a broadening access of the population to financial services, have been studied extensively, but less is known about its potential effects on financial stability. We explore the complementarity between credit booms and episodes of rapid expansion of the borrower base, or “credit inclusion,” and find that the confluence of both helps to predict future financial distress. Rapid credit inclusion on its own does not usually portend future instability, but it is much more likely to do so when combined with a credit boom. These results can help to enhance the policymaker’s early warning toolbox.

Keywords: Financial inclusion; Credit booms; Financial stability; Early warning indicators; credit inclusion; credit boom; IMF working papers; stability risk; boom shock; Credit; Financial sector stability; Inclusive growth; Global (search for similar items in EconPapers)
Pages: 45
Date: 2026-01-16
New Economics Papers: this item is included in nep-fdg and nep-pay
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=573286 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2026/008

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().