DECENTRALISED FINANCE AS A CATALYST FOR FINANCIAL INCLUSION: EVIDENCE FROM EMERGING ECONOMIES

Abstract

Decentralised finance has emerged as a transformative force in the financial sector, offering innovative solutions to enhance financial inclusion for underbanked populations. This study examines the role of decentralised finance as a catalyst for inclusive finance, focusing on its potential to deliver accessible, low-cost financial services via blockchain technology and smart contracts. Utilizing a mixed-methods approach, the research investigates the adoption, benefits, and challenges of decentralised finance in Sub-Saharan Africa, Southeast Asia, and Latin America. Quantitative analysis shows a strong correlation between decentralised finance usage and improved access to savings, credit, and remittance services. Qualitative results reveal key themes, including perceived autonomy, trust concerns, knowledge barriers, and infrastructure challenges, which differ across regions. For example, Latin American users adopt stablecoins to hedge against inflation, while Southeast Asian users rely on decentralised finance for remittances and play-to-earn gaming. Nevertheless, obstacles such as asset volatility, security risks, regulatory uncertainty, and low digital literacy impede widespread adoption. The study highlights the importance of tailored interventions, including user-friendly platforms, region-specific education, and robust infrastructure, to unlock the full potential of decentralised finance. Theoretical frameworks such as institutional theory and financial inclusion frameworks offer insights into the socio-technical factors influencing adoption. The findings call for a balanced strategy that integrates technological innovation, regulatory clarity, and community engagement to achieve equitable financial inclusion.

Keywords: Decentralised Finance, Financial Inclusion, Underbanked Population