Peterson K Ozili
Purpose The aim of this article is to develop a theory that explains how the actions of people at the bottom of the pyramid (BOP) enable financial inclusion in the BOP segment of the economic pyramid. It highlights the conditions that enable financial inclusion to take place in the BOP segment. Design/methodology/approach The study used the conceptual discourse analysis method to develop the BOP theory of financial inclusion. Findings The BOP theory of financial inclusion states that the provision of appropriate financial services to people at the BOP can help to meet their needs, improve their well-being and reduce their incentive to engage in anti-social actions that destabilize industries, markets and society. The theory offers seven predictions or hypotheses. One, there are unbanked adults with unmet basic needs. Two, they will use interaction with social networks to demand appropriate financial services. Three, they have incentives to use anti-social methods to ensure that their demands are met if ignored. Four, to avoid this, the authorities and financial service providers will work collaboratively to ensure adequate provision of appropriate financial services for them. Five, such intervention will discourage unbanked adults from undertaking anti-social actions. Six, unbanked adults will use financial services as a bridge to transition from the BOP to a higher level of the economic pyramid, thereby reducing economic inequality. Seven, the use of financial services and the quality of financial decision-making will determine whether banked adults will transition to a higher level of the economic pyramid or remain at the BOP. Originality/value This study formulates a BOP theory of financial inclusion that pays attention to the actions of people in the BOP segment and how their actions enable financial inclusion. The theory formulation in this article contributes to the literature by exploring how people at the BOP interact with financial services and its effect on them.