Financial inclusion has long been championed as a critical social objective to alleviate poverty and reduce inequality. However, a persistent “policy trade-off” narrative suggests that bringing lower-income, “vulnerable” populations into the formal financial sector may increase credit risk and undermine financial stability.

Recent collaborative research between the University of Luxembourg and the Alliance for Financial Inclusion (AFI) challenges this dichotomy. Analyzing data from up to 162 economies over 15 years, the study provides the most comprehensive evidence to date that financial inclusion does not destabilize financial systems. Instead, it acts as a “fitness program,” forcing financial institutions to modernize, digitalize, and build resilience to serve broader populations profitably.