The Policy Research Working Paper 10481 examines the household welfare gains from financial inclusion using a household model with incomplete financial markets. The paper shows that the welfare gains from a financial technology are equal to the area under dynamically compensated demand. The paper also estimates compensated demand for financial technologies using three randomized control trials that introduce experimental variation in interest rates. The welfare gains per dollar lent or saved are small, but the aggregate welfare gains from financial inclusion are still significant.
