Impact Pathfinder: Leveraging Evidence to Shape Financial Inclusion

To drive meaningful progress, we must first understand the impact of our work—this requires a deep, ongoing engagement with evidence.

In the past several years, our global community of donors, investors, policymakers, researchers, and financial service providers (FSPs) has begun to recognize the need to look beyond the paradigm of access and use of financial services. We are now thinking bigger and bolder about financial inclusion’s role in the world. Can it shift social norms around gender? Might it spur global progress on climate adaptation and mitigation? Could it bring informal entrepreneurs into the mainstream digital economy, fostering job creation and driving prosperity? 

However, this enthusiasm about financial inclusion is not universally shared. We’ve seen microcredit, for example, come under scrutiny from those who believe that it has failed to deliver on its promises or that, in some instances, it has even caused harm. Although these critics raise important questions and concerns, they sometimes rely on selective or anecdotal evidence which does not provide an adequate vision of the overall picture.

This divergence in perspectives highlights an important challenge we continue to face – the lack of a common understanding of what the existing evidence truly tells us about the impact of financial inclusion. To address this, CGAP, in partnership with Dalberg, has developed the Impact Pathfinder as part of a new outcome agenda for the financial inclusion community. As an interactive platform, the Impact Pathfinder is designed to make existing evidence on financial inclusion more accessible and actionable. By providing a straightforward way to access and interpret insights from the literature, the Impact Pathfinder supports decision-makers—including donors, investors, FSPs, regulators, and research organizations—in making informed decisions.

We hope that the Impact Pathfinder will contribute to the financial inclusion community in three critical ways. 

1. Keeping up with emerging evidence 

Financial services are constantly evolving, and the body of research examining their impacts continues to expand. For example, the evidence shows that credit can help farmers avoid using negative coping strategies to recover from climate shocks in the short run. However, in the case of recurring climate shocks over a longer period of time, using credit to recover from these shocks carries the risk of becoming over-indebted and resorting to negative coping strategies, such as selling productive assets and reducing consumption. Additionally, the up-to-date body of research on digital payments points to a positive impact on women’s entrepreneurship. Moreover, the research underpinning the Impact Pathfinder shows that savings – especially when combined with training in business management skills like bookkeeping – help women establish, expand, and diversify their businesses. Staying updated with this evolving evidence helps us refine services to better protect customers and leverage innovations effectively. The Impact Pathfinder helps by synthesizing and presenting current evidence, ensuring that decision-makers have access to the most recent insights. 

2. Understanding what really drives impact 

Even when evidence has been available for some time, practical application often lags behind. For example, research shows that savings groups are not well-suited to building resilience against covariate shocks (e.g., climate shocks). Such shocks can affect several to all group members simultaneously, making it difficult for them to save and repay, and can sometimes cause mass withdrawal or forced dropouts. On the other hand, research analyzed by the Impact Pathfinder shows that credit’s contribution to women’s economic empowerment can be boosted when regulators implement consumer protection measures such as requiring transparency in fee disclosure, and FSPs apply user-centric features, such as flexible repayment schedules. The Impact Pathfinder aims to foster discussions that challenge our assumptions and ensure our strategies and interventions are grounded in credible, nuanced, and up-to-date evidence that unpacks the influencing factors that modulate outcomes. 

3. Addressing increasing complexity 

The challenges we face—such as climate change, pandemics, conflicts, and rising inequality—are more complex than ever. To effectively address these challenges, professionals in different sectors beyond just finance need to leverage financial services like savings, credit, payments, and insurance to create meaningful change. The Impact Pathfinder illustrates how financial inclusion can support diverse goals, from job creation and women’s economic empowerment to climate action, by mapping out pathways and enabling users to delve deeper into the research. For instance, evidence from 21 studies demonstrates that insurance can allow farmers to increase their adaptive capacity by transferring risk to a third party, enabling them to invest in more climate-smart and profitable practices or technologies. The Impact Pathfinder currently includes 18 impact pathways and will continue to expand as new research emerges.

What makes the Impact Pathfinder unique is its practical applications. Based on over 600 studies, the platform enables users to find answers to critical questions based on existing research, showing both the strength of the evidence and identifying where further research is needed. For example, if a global development funder is interested in whether and how digital credit helps women access better jobs and livelihoods, the Impact Pathfinder offers several insights. First, it shows whether the evidence indicates a positive, mixed, or not positive link between digital lending and women's work opportunities. Second, it tells users whether the existing evidence on the topic is strong, moderate, or only indicative. Third, it identifies major factors influencing varied impacts across customers and regions. Lastly, the Impact Pathfinder identifies knowledge gaps, which, if addressed, could significantly improve our understanding of how financial services can drive positive outcomes. This comprehensive approach ensures that stakeholders can make data-driven decisions that maximize the impact of their financial inclusion initiatives.

Over the next two years, as part of CGAP’s broader Financial Inclusion 2.0 Initiative, we will continue to demystify the impact of financial inclusion. We will explore and publish new pathways in the Impact Pathfinder, reexamine past microcredit impact studies to better understand how context may affect varied outcomes, and use AI-driven methods to analyze growing pools of customer data. We will also share our experience trialing these new impact measurement approaches (see here for more details). Throughout this journey, we will continue to engage with financial inclusion stakeholders for their views and guidance.

Ultimately, we hope our work leads to better, more evidence-based decisions that address the world’s most pressing development challenges. This is just the beginning. We invite you to use the Impact Pathfinder in your work and share your feedback on how we can enhance it further. Together, we can deepen our understanding of impact and ensure the next stage of financial inclusion focuses on driving positive change.