Financial Inclusion in Papua New Guinea

Proposition 2 The gain to financial inclusion is given by Δυ = UFI (E1, E2) - UNF (YNF, YNF) 2+r+f = - In (1+f) + In 2+P f) (1+1) + (1+ B) ·B) S a (j) In ae (1+ d) 2+r+f (1 + f) (2+p) - dj + (1 + ß) (1 − j ) In (1 + t) Intuition: 1st term is resource cost of FI = f (d); 2nd & 3rd represent the intertemporal gains from trade; 4th & 5th interpreted as in Proposition 1 Lemma The gains to financial inclusion are decreasing in distance, d. Lemma д ad (AU) <0 The gains to financial inclusion are decreasing in the discount factor. д (AU) < 0 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 21/36

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