Abstract
This paper analyzes the determinants of financial inclusion and proposes an instrument of measuring financial inclusion in West African Economic and Monetary Union (WAEMU) countries. WAEMU countries do not have a reliable synthetic index to measure their financial inclusion level. The need for an accurate way to assess financial inclusion in the WAEMU zone is imperative because a set of indicators has been adopted within the Regional Financial Inclusion Strategy by the Central Bank of West African States (CBWAS). Our panel regressions reveal that real GDP, mobile phone penetration, and literacy rate have a positive effect on financial inclusion. Conversely, the weight of the rural population and interbank credit is negatively associated with the level of financial inclusion. Agricultural financing via the credit channel that banks grant to the government is likely to increase financial inclusion. We also find a positive impact of rural-oriented literacy on financial inclusion.
Highlights
Financial inclusion has become one of the key concerns of governments and international organizations over the past decade
The first is composed of countries with a relatively high financial inclusion (SIFI ≥ 0.30)
As shown in the table below, estimation using the Ordinary Least Squares (OLS) method was used for Models 1 and 2, while the Generalized Least Squares (GLS) method was used for Models 3 and 4
Summary
Financial inclusion has become one of the key concerns of governments and international organizations over the past decade. The objective of financial inclusion policies is to provide adapted formal financial services to serve the needs of excluded people, generally the poor, to improve their well-being (Honohan & Beck, 2007; Bruhn & Love, 2014). An estimated 400 million adults either do not have access to or do not use formal financial services in sub-Saharan Africa.
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