Demand-side analysis of measuring financial inclusion

Abstract

PurposeThe purpose of this paper is to measure the financial inclusion dimensions from the perspective of beneficiaries (demand-side).This research additionally attempts to assess the impact of financial inclusion on socio-economic status of primitive tribal groups (PTGs) in India.Design/methodology/approachUsing an exploratory factor analysis, the financial inclusion dimensions are identified for a sample of 520 families belonging to PTGs in India. In the next step, reliability and validity test were used to establish the financial inclusion dimensions and socio-economic status factors through confirmatory factor analysis using analysis of moment structures. Finally, structural equation modeling (SEM) had been applied for testing the hypothetical relationships.FindingsThe study documented five-dimensions of measuring financial inclusion from demand side perspective. The dimensions are as follows: physical proximity, availability, ease of access, affordability and usage. It was found that these factors represent the various dimensions of financial inclusion, which has a significant impact on socio-economic status of the beneficiaries.Research limitations/implicationsThe research results focus on dimensions of financial inclusion, which have an impact on the socio-economic status among the most PTGs in India. The research offers ideas to policymakers to outline strategies to enhance the access to and usage of financial services.Originality/valueThe present research is one of the first few studies that present the demand-side perspective to assess the financial inclusion dimensions of the “financially most excluded” groups – PTGs in India using a SEM approach.