In the context of efforts to increase levels of inclusive economic growth and entrepreneurship, bringing youth into developing economies is of real importance. However, despite the large pool of talent and high entrepreneurial capacities, access to business financing remains a significant hinderance to youth financial inclusion.
This working paper provides an overview of youth entrepreneurship and access to finance in South and Southeast Asia – with a specific focus on the developing economies of Cambodia, Myanmar, and Lao PDR – and offers more in-depth insights into barriers to finance and financial service usage for youth. It draws from Findex and FinScope financial inclusion data, entrepreneurship survey data (EDS and GEM), and an in-house Big Data study conducted by UNCDF (2018). The paper finds that while youth have sufficient business or learning opportunities and are in fact more loyal customers and use savings accounts more actively than their older counterparts, their access to formal credit is constrained due to barriers including a lack of collateral and credit history, and certain restrictive regulatory issues such as minimum age requirements to open an account, amongst others.
The paper concludes that creating positive regulatory environments and removing service barriers to youth financial inclusion can unlock significant growth and entrepreneurship opportunities in emerging ASEAN and SAARC markets – including LDCs – and that new business models are emerging through the rise of financial technology (‘fintech’) that can accelerate youth financial inclusion and entrepreneurship in these nations including alternative credit scoring, digital banking for millennials, crowd- and P2P-lending, digital financial literacy and business skills platforms.
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