Financial inclusion and economic development: Turkey and Greece

Purpose- Financial inclusion is defined as a process that ensures the ease of access, availability, and usage of the formal financial system for all members of an economy by emphasizing the use of accessibility and availability of financial services. A financial sector is measured and compared on four main features; debt is the size of financial institutions, access is the access and use of financial services by the users, efficiency is the efficiency in the provision of financial services, and stability is the stability in the provision of financial services. Financial inclusion, in short, is adults' access to and use of financial services. This study aims to measure the financial inclusion level for selected OECD countries from 2010-2021. Also, this study aims to estimate the effect of financial inclusion on economic growth and income inequality for selected countries. Methodology- The data used in this study cover a range of variables related to financial inclusion from various institutions, including the IMF-Financial Access Survey (IMF-FAS), the World Bank - World Development Indicators (WB-WDI), the World Bank - Global Financial Development Database (WB-GFDD) and the Standardized World Income Inequality Database (SWIID). These variables provide insights into the dimensions and determinants of financial inclusion and their impact on economic and social outcomes for selected OECD countries. In the study, we run panel data regressions for each group separately, using GDP per capita as the dependent variable to determine the impact of the Financial Inclusion Index on economic growth. We also construct two different models for each group of countries with and without the added control variables into the models. Findings- The analysis reveals that the effect of financial inclusion on economic growth is negative for all groups of countries. The impact is significant for Group 1 and Group 2. The magnitude of coefficients changes when we add control variables to the model. However, it does not change the significance level of the coefficients. The magnitude of the coefficients increases as countries’ per capita income increases. At the same time, the effect of financial inclusion on the GINI index is significant only in the model for Group 3 with control variables. The sign of the impact is negative. It implies that the GINI index decreases as the financial inclusion index increases. So, the effect of financial inclusion on income inequality is positive for countries in Group 3. Conclusion- The empirical results did not support the relationship between financial inclusion and economic growth (GDP per capita). These results may be explained by advocating the financial sector's quick and fundamental digital transformation. Hence, the rules for availability, accessibility, and usage of financial products and system are completely changed in the past ten years. On the other hand, the relationship between financial inclusion and income inequality, measured by GINI Index, is consistent with the literature only for Group 3 countries (developing countries). The increase in the gap between rich-developed and developing countries may explain these results. An increase in financial inclusion still supports adjustments in income inequality in developing countries, but its effect is disappeared in developed countries in the last 12 years. Keywords: Financial inclusion, economic growth, OECD countries, financial indicators, income inequity. JEL Codes: G20, G21, G23

PurposeThe purpose of this study is to measure the availability, accessibility and usability of financial products and services in both rural and urban India from 1991 to 2014.Design/methodology/approachThis paper uses principal component analysis (PCA) method to construct financial inclusion index that serves as a proxy variable for indicating the inclusiveness of financial products and services among the rural and urban people. To fulfill this objective, the study proposes separate indexes of financial inclusion for both rural and urban India from 1991 to 2014. The paper uses annual time series data from 1991 to 2014 to construct the rural-urban financial inclusion index. The used data have been collected from the basic statistical returns of Reserve Bank of India and Economic Political Weekly research foundation.FindingsThe study inferences that though there is a remarkable increase in financial inclusion in India from 1991 onwards, it does not result in sizeable growth of financial access to rural masses in comparison to urban masses. The rural India does not substantiate an equivalent growth to that of urban India, contrasting a perceptible increase in financial inclusion. The finding of this study will help the researchers and policymakers to understand the status of financial inclusion in the context of both rural and urban India. Furthermore, policymakers can take appropriate policy initiatives to fulfill the financial inclusion gap that exists between rural and urban people. Additionally, the proposed index is easy to compute and can be used to make comparison across countries for further studies.Originality/valueThe present paper attempts to include all possible dimensions (and indicators within a dimension) that have been considered so far by various authors. Therefore, the authors hope that this index will be more indicative and accurate than previous index. Again, the authors propose to use PCA for the first time to assign the weight of factors in the financial inclusion index for rural and urban India separately.

PurposeThe purpose of this paper is to calculate the financial inclusion index and analyze its dynamics in developing countries.Design/methodology/approachThe authors use the two-stage principal component analysis (PCA) method and consider financial technology innovations to improve the accuracy of the financial inclusion index.FindingsThe authors found a downward trend in the financial inclusion index in most developing countries over the study period. The authors also found that a high financial inclusion index is linked to high scores in the Doing Business and high business climate regulation ranking. In addition, the authors observed that the rates of low financial inclusion in developing countries are due to low utilization of and unequal access to financial services.Practical implicationsThe analysis suggests that policymakers in developing countries could invest in digital infrastructure to extend access to financial services in remote areas. They could also encourage financial innovation, particularly in financial technologies, by adopting flexible regulatory frameworks. Promoting the financial inclusion of marginalized groups through targeted initiatives tailored to their needs is another solution. They could also encourage the use of financial services by raising awareness and educating populations through training programs. Finally, to improve the business climate, governments could simplify administrative procedures and promote transparency and legal stability.Originality/valueUnlike previous studies, the use of the two-stage PCA method and the consideration of financial technology (Fintech) innovations such as mobile money in the determinants of the financial inclusion index improve the accuracy of the index.

Digital finance has witnessed rapid development in the last few years that might threaten the way traditional financial services are being used. It creates new opportunities for small businesses and low – income groups that have no or limited access to formal financial services. Therefore, digital financial inclusion plays an important role in enhancing a country`s financial inclusion, meeting some sustainable development goals and achieving higher economic growth. Although few studies took the attempt to measure the inclusiveness of the financial system in Egypt, however, no study did quantify the financial inclusion for Egypt. This paper aims to fill in this gap by contributing to the literature in two ways; first, by introducing a novel comprehensive financial inclusion index for the first time using a three – stage principle component analysis (PCA). Second, we build two separate indices; traditional and digital financial inclusion indices through combining access, usage, and barriers indicators for traditional financial index while for digital financial index we combined access and usage indicators. Findings revealed that both “traditional financial index” and “digital financial index” are equally important in explaining the overall financial inclusion of Egypt and thus, digital finance is seen as a complement rather than a substitute to the traditional financial services. Moreover; our results also revealed that although Egypt has low level of digital financial inclusion (0.31), digital finance is playing a significant and positive role in achieving greater financial inclusion as evidenced by improving the overall index from low (0.41) to relatively high inclusion level (0.52).

In the last couple of years, there has been a shift in the financial services industry that goes hand in hand with accelerated technological advancement; it, therefore, requires a more encompassing approach to assessing its inclusive nature. This study, therefore, extends the understanding of analyzing cross-sectional data on Financial Inclusion by making a methodological contribution in the form of an improved composite Financial Inclusion Index. To offer a more comprehensive picture of the level of financial inclusion in some selected economies, this index includes the ‘mobile money agent’ into a range of dimensions. Constructed from data from 75 countries in 2011, 2014, 2017, and 2021, the index provides both capabilities and accessibility of digital financial services. As mentioned above, the index combines physical and digital financial access and usage, making up the overall Financial Inclusion Index. It prioritized the three-stage PCA method with an endogenously stipulated weight to measure financial inclusion. The data was collected from secondary resources, resulting in a comprehensive Financial Inclusion Index. The study shows that Korea, the United States, Australia, Switzerland, and Japan rank high in traditional financial access, while Uganda, the United Kingdom, Trinidad, Kenya, and Ukraine have the highest levels of digital financial access. Overall, the UK, USA, Korea, Uganda, and Trinidad are presented with the highest amount of financial inclusion, combining all the four factors mentioned earlier. On the other hand, low-performing nations include Afghanistan, Madagascar, and Angola, among others, in all three indices, while nations such as China and Mexico can be categorized as middle performers in all the indices. The overall financial inclusion index generated here provides a good benchmark tool for policymakers to comprehensively assess and rank such economies at different times. The aggregate perceived financial inclusion index is constructed to be easy to compute and allows cross-sectional comparison with other economies.

This study aims to examine the relationship between financial inclusion and economic growth in 22 OIC countries from 2005-2018 using a panel regression model, especially the REM model. There are three financial inclusion indicators as independent variables considered in this research: the financial inclusion index, the financial outreach index, and the financial usage index. We use GDP per capita as a proxy measure for economic growth. Using a random effect model (REM), our empirical results show that financial inclusion positively and significantly affects national economic growth in OIC countries. It is proven by all the proxy variables of financial inclusion, i.e., the financial inclusion index, financial outreach index, and financial usage index, positively correlate with the GDP per capita as a proxy for national economic growth. Other empirical results from control variables show that inflation is found significant to decrease OIC's economic growth. Trade also has significant effects on economic growth in OIC countries. Besides, in this study, unemployment has positively effects to increase economic growth in OIC countries. The main hypotheses in this study are accepted. Therefore, it could be concluded that financial inclusion positively contributes to increasing economic growth in Muslim countries. Furthermore, this finding will implicate the government to enhance and promote financial inclusion programs massively and provide access to financial services formally, such as insurance, saving, or credits/financing for the underprivileged community, especially for SMEs in all rural areas in OIC countries.

This research is based on the problem is the low involvement of the public in making transaction using Islamic banking service in Indonesia. This study aims to describe and measure the level of Islamic financial inclusion on the Islamic banking sector include Sharia Commercial Bank (BUS), Sharia Business Unit (UUS) and Rural Sharia Bank (BPRS) in Indonesia period 2015-2018 using Index of Financial Inclusion. There are three dimensions measured in this study dimensions of accessibility, availability and usage. This research was conducted in 33 provinces in Indonesia. The method used in this research is quantitative descriptive method. The results showed the level of sharia financial inclusion in 2015-2018 experienced a fluctuating development in which the average Index of shariah financial inclusion in Indonesia is the low category. From 33 provinces in Indonesia, DKI Jakarta included in the high category, Aceh and D.I Yogyakarta are in the medium category, and there are 30 provinces with low category. Nusa Tenggara Timur Province is a province with the lowest category during the study period. Generally, the dimensions index of shariah financial inclusion are the low category.

Financial inclusion is a major policy concern especially in developing economies. However, an established measure of financial inclusion is still absent. This paper aims to fill this gap by measuring and examining the level of financial inclusion in 66 developing economies. A Financial Inclusion Index (FII) was constructed, incorporating five indicators (ATM, Bank, Other Financial Institutions, Deposits and Loans) for 2013 until 2019. Two-staged Factor Analysis was employed for weights assignment. The results showed that the average level of financial inclusion in developing economies was low but with significant variation among group of countries. A lower level of financial inclusion was observed among the African countries as well as the low-income and lower-middle income countries. The paper also analysed the relationship between financial inclusion and economic development. The findings showed that more developed economies had higher income and thus, higher financial inclusion. While the index is valid and reliable to be used for comparison among developing economies, the study was unable to include indicators of mobile and internet banking due to data constraints. Despite this caveat, the findings of this study will be useful for policymakers in shaping financial inclusion policies. Keywords: financial inclusion, financial inclusion index, economic development, factor analysis

PurposeThis study has a dual purpose. The first is constructing a financial inclusion index to investigate if the reforms implemented during the last decades at the macroeconomic and sectoral levels have contributed to increase the financial inclusion level in Morocco. The second is to deepen the investigation to explore the impact of these reforms at the microeconomic level, by focusing on six major issues: determinants of financial inclusion, links between individual characteristics and barriers to financial inclusion, determinants of mobile banking use, motivations for saving, credit objectives and determinants of resorting to informal finance.Design/methodology/approachFirst, the principal component analysis methodology is mobilized to construct a financial inclusion index for Morocco. Second, the probit model methodology on a micro-level database of 5,110 Moroccan adults is used.FindingsFirst, the financial inclusion index shows that financial inclusion in Morocco over the last two decades has followed different trends. The first period (1999–2004) was characterized by a slight upswing in the level of financial inclusion. In the second period (2004–2012), the level of financial inclusion increased significantly. During the third period (2012–2019), the financial inclusion maintained almost the same level. Second, empirical results showed that the determinants of formal finance and mobile banking are different from those of informal finance. Having a high educational attainment and being a participant in the labor market fosters financial inclusion. Concerning financial exclusion determinants, the results emphasized that a high educational attainment reduces the barriers leading to voluntary exclusion. As income level increases, barriers of involuntary exclusion such as “lack of money” become surmountable. Although "remoteness" and "high cost" are the major barriers to financial inclusion of all Moroccan social classes, the development of mobile banking allows to eliminate, smoothen and/or loosen all barriers sources of involuntary exclusion. As for the barriers causing voluntary exclusion, the Islamic finance model constitutes a lever for the inclusion of population segments excluded for religious reasons. As for the determinants of the recourse to informal finance, being a woman, an older person and having a low educational level (no more than secondary education) increase the probability to turn to informal finance.Research limitations/implicationsThe main limitation of this study is the non-availability of data on the two dimensions (quality and welfare) of financial inclusion. The composite index is constructed on the basis of two dimensions (access and use) for which data are available.Practical implicationsThis study has three main implications. In practice, with the launching of the National Strategy for Financial Inclusion, this work provides empirical grounded evidence that contributes to design financial inclusion policies in Morocco. In research, while the debate on financial inclusion, mobile banking and informal finance has been raging in recent years, Morocco, like many other African countries, has not received coverage on these topics at the household level.Social implicationsFor society, this study provides considerable insight about the segments of population that are financially excluded and the main reasons for their exclusion.Originality/valueThis study enriches the existing literature with four essential contributions. First, it analyzes the evolution of the level of financial inclusion in the Moroccan economy through the development of a synthetic index. Second, it is the first to study the Moroccan population's financial behavior on the basis of micro-level data, which will help understand more precisely their financial behavior and the main obstacles to their inclusion. Third, this study explores the determinants of the use of mobile banking. Fourth, it sheds some light on the main determinants of the recourse to informal finance.

This study examines the relationship between financial inclusion and monetary policy in nine selected ASEAN (Association of Southeast Asian Nations) countries during 2010-2019. To answer the objective of this study, the Vector Error Correction Model (VECM) is used to analyze the effect of financial inclusion on inflation as a proxy of monetary policy effectiveness. In addition, the causality between financial inclusion and monetary policy is also examined in this study. The data used are panels data and collected through secondary sources. The multidimensional approach of IFI (index of financial inclusion) is constructed to represent a comprehensive financial inclusion measurement. The results showed that financial inclusion had a negative effect on inflation in the long-term and short-term; it indicates that an increase in financial inclusion will lower inflation which eventually increases the effectiveness of monetary policy in Indonesia, Malaysia, Thailand, Philippines, Singapore, Vietnam, Cambodia, Myanmar, and Laos. Moreover, a causality exists between financial inclusion indicators and monetary policy in selected ASEAN countries. This study concludes that financial inclusion through access and usage of financial services improves the efficiency of monetary policy in nine selected ASEAN countries in controlling inflation. This study suggests that monetary authorities must emphasize the link between financial inclusion and monetary policy objectives. Advanced financial inclusion can help policymakers formulate and implement monetary policies contributing to economic stability and sustainable growth.

Financial inclusion aims to provide the general public with access to a variety of financial services and products that are suited to the community's abilities and requirements, particularly for those who are unbanked. The goal of this study is to identify and examine Indonesia's financial inclusion index from the perspective of the microfinance institution business sector, as well as the obstacles, opportunities, and challenges that policymakers face in increasing the financial inclusion index, which has implications for improving people's welfare. The Indonesian financial inclusion index from the microfinance institution business sector, as well as other business sectors, were compared using the research method of literature study. The descriptive qualitative technique employs an inductive process as an analytical tool. Based on the research results, 1. Indonesia's financial inclusion index is still quite low, contributed by the microfinance institutions (MFI) sector. Community groups in Indonesia have not fully utilized official financial services, especially as the main source of cash and financing. As a result, policymakers must expand the availability of financial inclusion. In 2019, Indonesia's financial inclusion index was 76.19 percent. increase from the previous year. The banking industry contributed the most (73.88%), followed by financial institutions (14.56%), insurance (13.15%), pawnshops (12.38%), pension funds (6.18%), and the capital market (1.55%). The MFI business sector, on the other hand, contributes only 0.72 percent.This demonstrates that the MFI, which is the foundation of the community's economy, contributes the least. 2. Financial literacy accounts for only 0.85% of Indonesia's financial inclusion index, posing a challenge to efforts to increase the country's financial inclusion index. MFIs are anticipated to strengthen the economy of the community, but because they provide small-scale funding, it is critical to increase their participation. Microfinance, on the other hand, provides micro-entrepreneurs, low-income organizations, and needy households with loans, deposits, money transfers, insurance, and payments.

Purpose ― The main objective of this study is to develop a comprehensive digital financial inclusion index (CDFII) that accounts for technology-driven financial inclusion and to compare it with a traditional financial inclusion index (TFII) to enhance the measurement of fintech-driven financial inclusion across countries.Methods ― The study employs a three-stage principal component analysis (PCA) to construct the CDFII and TFII using the latest available data from 31 developing countries during the period 2015-2021. The CDFII incorporates a new sub-index measuring individual literacy levels for using financial services, along with existing sub-indices capturing the penetration, availability, and usage of DFS. By integrating digital financial inclusion (DFII) and TFII, the overall CDFII is estimated.Findings ― The findings reveal that the levels of DFII and CDFII are higher than TFII for most of the economies examined. This indicates the significant impact of technology-driven financial inclusion in expanding access to formal banking and non-banking financial services for previously unbanked populations.Implication ― The study implies that policymakers and researchers should prioritize the integration of technology-driven financial inclusion indicators, such as the comprehensive digital financial inclusion index (CDFII), into their assessments and interventions to ensure a more accurate and effective approach to promoting inclusive and sustainable economic development.Originality ― This study introduces the CDFII as a novel comprehensive index that addresses the shortcomings of traditional financial inclusion indices. By incorporating individual skill levels and considering dimensions specific to DFS, the CDFII provides a more accurate representation of fintech-driven financial inclusion levels. This contributes to the existing literature on financial inclusion measurement and provides a valuable analytical tool for researchers and policymakers.

The study proposes a multidimensional financial inclusion index (FII) for 27 Indian states. The separate demand and supply FII is constructed across the states for the period 2004–2017. The Human Development Index (HDI) methodology developed by the United Nation Development Programme (UNDP) is adopted in the construction of current FII. After the launch of Pradhan Mantri Jan Dhan Yojna (PMJDY) in 2014, there is no study in the Indian market attempted to examine the status of financial inclusion across the states over a longer period. The current study fills this gap by proposing the demand and supply FII. The major findings of the study show that the level of FII measure tends to indicate marginal improvement in the level of financial inclusion across states during 2004–2017. Most of the northern and north‐eastern states were found to be under low financial inclusion. On the other hand, most of the high financially included states were also better in terms of HDI and literacy. Further, PMJDY was unable to augment financial inclusion across the states because of marginal impact of the scheme which helped only a few states to move from low to medium FII states. On the contrary, the rise in the dormant account, low HDI and illiteracy across the majority of the states were the major reason behind the failure of PMJDY. Hence, structural reforms are warranted in the policy framework to provide financial services to poorest among the poor at low or no cost for better economic outcomes.

Pradhan Mantri Jan Dhan Yojana is a Nationwide financial inclusion scheme launched on 28th Aug 2025, with the aim to provide zero-balance bank accounts to the unbanked population and to promote financial inclusion and formalization of the economy. Financial inclusion in this study refers to the extent to which the working-age population (18–59 years) can access and utilize formal banking services, as measured by account ownership, deposit balances, and the use of digital payment methods. This study aims to compare the level of financial inclusion across Indian states and Union Territories through the PMJDY using selected quantitative indicators. Methodology: The research relies on secondary data, which were gathered from journals, reports, and data retrieved from PMJDY website. This study constructs a composite Financial Inclusion Index using three key dimensions—banking penetration, disbursement, and financial services—and classifies Indian states into high, medium, and low inclusion categories based on their index scores, which range along a continuum from 0 to 1. Findings: This study shows notable differences in financial inclusion levels between states under PMJDY. Few states and Union Territories, such as Assam, Chhattisgarh, West Bengal, Jharkhand, Odisha have high levels of inclusion. Findings of the study reveals that 8 out of 36 States/UTs showed high progress in FI, other 13 shows moderate inclusion and 15 falls to low level of financial inclusion. Originality: This paper constructs a nationwide Financial Inclusion Index using PMJDY indicators across Indian states. By integrating access, usage, and service dimensions into a single composite measure, the study reveals inter-state disparities and offers a structured framework for evaluating the effectiveness of financial inclusion policies in India.

This research focuses on the multifaceted realm of financial inclusion within Developing Countries. It unfolds a meticulous exploration by formulating a financial inclusion index based on data extracted from a sample comprising 75 Developing Countries, spanning the period from 2010 to 2018. The index's creation comprises of two distinct stages. In stage one, a principal component analysis is applied to derive sub-indices encapsulating the dimensions of access, utilization of financial services, technological advancements, and infrastructure, drawing from an array of 24 financial indicators. Subsequently, the second stage normalizes values within each dimension, culminating in an overall index through the application of the Euclidean Formula. The findings of this study emphasized the pivotal role of a National Financial Inclusion Strategy in enhancing financial inclusion in each respective country. Customization of these strategies to align with specific economic goals of each nation is paramount. Central to these objectives are primary priorities, which diverge among countries. Notably, countries like Romania, Serbia, and Mauritius place a premium on fostering financial literacy, while others such as Pakistan, Costa Rica, Rwanda, and Guinea emphasize the growth of Small and Medium Enterprises. In contrast, nations like Guatemala, Mauritania, Thailand, and Ukraine concentrate on expanding their financial networks. Furthermore, countries grappling with low levels of financial inclusion attribute this challenge to factors such as deficient financial literacy, the absence of a well-defined financial inclusion strategy, financial constraints, a preference for traditional financial services, and limited awareness surrounding digital innovations. Conversely, nations boasting moderate levels of financial inclusion, yet not progressing towards higher levels, point to the dearth of technological innovation and restricted prudential measures as pivotal stumbling blocks. This comprehensive analysis underscores the necessity of dynamic strategies tailored to individual countries to achieve robust financial inclusion on a global scale.