Entrepreneurship and financial inclusion through the lens of instrumental freedoms

This article investigates the interrelated nature of instrumental freedoms and how they combine to engender financial inclusion among low-income entrepreneurs. Drawing from Sen’s capabilities approach, we emphasize a need for understanding the freedoms associated with institutional arrangements and the complex causal processes that lead to financial inclusion among micro-entrepreneurs. We perform a fuzzy set qualitative comparative analysis of 19 countries in Latin America and the Caribbean. The findings indicate four causal combinations for financial inclusion. Our findings indicate that no single instrumental freedom is necessary for financial inclusion; it does not necessarily depend on the provision of microfinance and that political freedom is an important peripheral condition for inclusion. This allows us to question some of the assumptions about how microfinance operates amid a set of complex institutional instrumental freedoms.