Abstract
Financial inclusion has emerged as a new paradigm for driving economic growth and alleviating poverty, addressing various patterns of financial exclusion. Despite concerted efforts by countries and international bodies to promote financial inclusion through multiple initiatives, the role of an explicit deposit insurance scheme remains underemphasised as a measure to close the financial gap in most countries, including in South Africa.
This research is inspired by the realisation that contemporary literature lacks a unified measure of financial inclusion that considers the impact of an explicit deposit insurance scheme. Therefore, this study aims to critically evaluate the role of the South African explicit deposit insurance scheme as a policy tool for promoting financial inclusion by instilling public confidence in the banking sector and promoting competition among banks, regardless of their size.
Literature reveals that financial inclusion levels are consistently higher in countries operating an explicit deposit insurance scheme or holding the International Association of Deposit Insurance membership. This necessitates the re-evaluation of financial inclusion strategies in South Africa. In this regard, this study advocates for the integration of the South African explicit deposit insurance scheme into the policies and regulatory frameworks designed to achieve financial inclusion in South Africa. It concludes that explicit deposit insurance scheme will significantly contribute to the country’s financial inclusion.