Driving Inclusive Fiscal Policy and Financial

Inclusion: Empowering Participation and Equity in

Public Administration

This seminar paper aims to explore the fundamental role of inclusivity

in generating fiscal policies under the domain of Public Administration. This

examines the pros and cons of cultivating and promoting the practice of

inclusivity to improve participation and equity of the decision-making,

allocation of resources, and financial sustainability in the field of fiscal

management under public administration. Throughout this paper, the

researcher is able to provide insights regarding fiscal policy and financial

inclusion as instruments in promoting participation and a more equitable

society, why and how inclusivity is important in the field of finance and how

does it empower public administration.

Background of the Study

Managing the resources of an organization and in the government has

been a critical aspect for these organizations to be efficient and effective. This

determines their revenue, expenditure, resource allocations, and budgeting.

The field of fiscal management entails the management and decision-making

process about how to collect and spend the finance of an organization, in this

sense, of Public Administration. For proper implementation of fiscal

management, fiscal policy is put into the table with the purpose of deliberately
measuring circumstances in finance to prevent economic downturns and foster

strong and stable economic growth.

Fiscal Policy refers to the governmental use of taxation and spending to

influence conditions in the economy (T. Tamplin, 2023). It is commonly used

by the government in order to promote strong and sustainable growth and

eradicate poverty. Fiscal policy typically enters the picture when conditions

are deteriorating swiftly enough to call for government involvement, such as

during a recession or an inflationary era. The role and objectives of fiscal policy

gained prominence during the recent global economic crisis when

governments stepped in to support financial systems, jump-start growth, and

mitigate the impact of the crisis on vulnerable groups (M. Horton – A. El-

Ganainy, n.d.).

In a study by El-Khouri (year), fiscal policy refers to the actions taken

by the government to direct and regulate taxation and spending. According to

the conventional wisdom, fiscal policy primarily serves the three goals of

allocation, distribution, and stabilization. The process of partitioning total

resource consumption amongst social and private resources and selecting the

mix of social goods is known as the allocation function. The process of

modifying how income or wealth is distributed in order to maintain compliance

with what society deems fair is known as the distribution function. The

stabilization function aids in fulfilling the primary macroeconomic goals

stability, and economic growth.

Financial inclusion on the other hand is a state wherein there is effective

access to a wide range of financial services for all (Bangko Sentral ng Pilipinas,

2013). This goes under to making efforts in order to make financial products

and services accessible and affordable to every individual and business,

regardless of their personal net worth or company size. It strives to remove

the barriers that exclude people from participating in the financial sector and

use these services to improve their lives (M. Grant, 2020). This can be

considered as a building block for both poverty reduction and opportunities for

economic growth. An initiative was conducted by the World Bank titled

“Universal Financial Access 2020” – with an aim to provide at least one billion

people worldwide with at least basic access to financial services, such as

maintaining a bank account or other financial account from which they can

send and receive payments and store their money (TWB, 2018).

In the Philippine context, according to Bangko Sentral ng Pilipinas (BSP),

gaining accessibility to financial services continues to be a major obstacle,

particularly in an archipelago of 7,107 islands that are home to about 92

million people. Despite a persistent rise in the overall population of the

distribution of banks and ATMs is heavily weighted in favor of densely

populated urban areas. According to the statistics, thirty-seven percent of the

1,634 cities and municipalities do not have a banking office at the same time
fifteen percent of the total population live in unbanked cities and

municipalities. The data gathered by BSP presented a ratio that stated that

for every ten thousand Filipino adults there is one bank and two ATMs. These

statistics has emphasized the lack of access for every Filipino across the

archipelago to secure their finances and take a step into managing their

finances.

Statement of the Problem

This seminar paper aims to provide a closer look into the role of

implementing inclusivity in generating fiscal policies under the domain of

Public Administration. This paper also aims to examine the pros and cons of

promoting inclusivity to improve and empower equity in fiscal management.

Furthermore, this paper aims to satisfy the following:

• What are the barriers and challenges faced by marginalized and

underserved populations in accessing financial services and participating

in the formal economy?

• What is the impact of inclusive fiscal policies on promoting financial

inclusion and reducing inequalities?

• What is the role of public administration in fostering equitable

participation and representation in the formulation and implementation

of fiscal policies?
 • How can government agencies enhance the participation and equity in

public administration and promote inclusive fiscal policies?

Theoretical Framework

This research is anchored to the Public-Private Partnership. Public-

private partnerships are collaborations between a government organization

and a business from the private sector that can be used to fund, construct,

and run projects like parks, convention centers, and public transit systems. A

project's funding through a public-private partnership may enable an earlier

completion or even the project's potential. Public-private partnerships may

include giving up tax or other operating money, liability protection, or a

portion of ownership rights over things that are ostensibly public.

With Public-Private Partnerships, it develops and implements plans that

would greatly benefit the public – regardless of their socio-economic status.

This partnership enables the public to participate more in public administration

which in turn helps promote and construct inclusive fiscal policies due to the

reduced inequalities and limitations set for the public. The Public-private

partnership ensures that no one in the society gets left behind therefore

ensuring more active participation and pushes the development and

promotion of additional fiscal policies that are inclusive.

Hypothesis
 It is hypothesized that inclusivity and fiscal policies are driving forces

that enhance the participation and equity in public administration.

Results and Discussion

According to TaskUs (2022) there are six major financial services

challenges in a post-pandemic world. Businesses were urged to step up their

digital transformation efforts after the COVID-19 pandemic forced the world

to limit face-to-face interaction. This was accompanied by a number of

challenges, including an increase in data breaches and privacy worries, as well

as evolving regulatory and compliance requirements. As if that weren't

enough, consumer demands are always changing as they demand more

convenient and tailored services. For these difficulties in the financial services

industry, dominoes just keep falling.

The six major challenges are the following: rising customer demands,

customer retention and loyalty, increased competition in the area, data

breaches and cybersecurity issues, technology’s unprecedented pace, and

maintaining regulatory compliance. These challenges may contribute to the

evident lack of participation from the public.

the degree of financial inclusion in developing nations are presented in Table

1. To test the reliability of the regression results, many macroeconomic

variables and models are incorporated. While model (2) does not include per

capita real GDP because it is highly correlated with age dependency ratio (the

pairwise correlation is 0.7733), secondary school enrollment ratio (0.7748),

and ratio of internet users (0.8026), model (1) does so with fewer control

variables. To view the combined result, Model (3) contains all the control

variables.

The fixed effect estimates demonstrate that the level of financial

inclusion in developing countries is highly influenced by factors such as per

capita real GDP, age dependency ratio, inflation rate, ratio of internet users,

and income inequality. Particularly, the ratio of internet users and real GDP

per capita have a favorable impact on financial inclusion, while the age

dependence ratio, inflation rate, and income inequality have a negative

impact.
 The empirical data on how financial inclusion affects poverty in

developing nations is shown in Table 2. Starting with a simple model that just

takes into account one variable, this study gradually adds more control

variables. The number of observations is dramatically reduced when new

control variables are taken into account across models, as some nations are

leaving the sample owing to a lack of data.

Analysis

The data presented above contribute to the lesser participation of the

public due to the challenges of finance as well as the drawbacks due to poverty

and other factors. The inclusivity of fiscal policies will serve as the driving force

to help the government and other private sectors generate more active

participation from the public. According to data presented, developing nations

faced more struggles to raise participation from the public due to the growing

rate of poverty within their country which means that people have less income

and means to gain access to banks in order to manage their finances well.
People in developing countries also face struggles in improving their financial

capabilities due to the restrictions and constraints brought upon by their socio-

economic status.

Conclusion

Based on the data presented, discussed, and analyzed, there are a lot

of factors that contribute to the lesser participation of the public in the

economy therefore government and private sectors must build a partnership

in order to come up with fiscal policies that would encourage the public to

participate more, help the public gain more access to banks, and help them

by providing inclusivity regardless of their financial standing and economic

status.

References:

Financial Inclusion in the Philippines. (2013). Bangko Sentral Ng Pilipinas, 1.

https://www.bsp.gov.ph/Media_And_Research/Financial%20Inclusion%20in

%20the%20Philippines/FIP_1Qtr2013.pdf
Overview. (n.d.). World Bank.

https://www.worldbank.org/en/topic/financialinclusion/overview

Omar, A. H., & Inaba, K. (2020). Does financial inclusion reduce poverty and

income inequality in developing countries? A panel data analysis. Journal of

Economic Structures, 9(1). https://doi.org/10.1186/s40008-020-00214-4

TaskUs. (2023, April 28). 6 Major Financial Services Challenges Post-Pandemic

| TaskUs. https://www.taskus.com/insights/financial-services-industry-

challenges/#:~:text=Data%20Breaches%20and%20Cybersecurity%20Issue

s,for%20financial%20services%20companies6.

Team, I. (2022). Public-Private Partnerships (PPPs): Definition, How They

Work, and Examples. Investopedia.

https://www.investopedia.com/terms/p/public-private-partnerships.asp