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Abstract:
Some empirical studies support the argument that greater Financial Inclusion (FI) improve the quality of financial services and benefit poor people. Then FI has become a significant issue in developing countries like Indonesia where the large number of people are still far from the access to basic financial services and formal financial institutions and the poverty remains a big issue. Base on the World Bank's Survey (2010), only 49 percent of Indonesian households have access to formal financial institutions, while The Central Bank of Indonesia-Bank Indonesia (BI) base on Household Balance Sheet Survey (2011) shows that only 48 percent of households save their money in formal financial institutions and non-financial institutions. This paper describes the FI in Indonesia, especially how the role of FI in reducing the poverty, since the average number of poverty growth pattern is decreasing. The % of poverty growth semi annually from March 2012 until September 2017 is -0.81%. The number in the urban is -0.30% and in the rural is -1.11%. These suggest that there is a decreasing number of poverty growth in Indonesia inline with the increasing role of FI. This argument supported by negative correlations between financial inclusion indicators and poverty
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