The level of financial inclusion in Ukraine: Measuring access, quality, and usage of financial products and services

Yuliia Shapoval,Oleksii Shpanel-Yukhta,Kateryna Gruber,Andrii Shkliar

doi:10.21511/bbs.16(2).2021.06

Abstract

While financial inclusion is seen as a goal of socio-economic development, there is still no clear understanding of how to measure it. Following this concern, the paper deals with the computation of the financial inclusion index of the Ukrainian economy using an annual dataset spanning from 2008 to 2020 and following the Sarma methodology. The object of the study is a set of indicators of usage, access and quality of financial products and services. The obtained results demonstrate the medium level of financial inclusion. The improvement of financial inclusion is observed in 2012, 2013, 2020 (namely 0.55 – 0.56 in the range of 0 and 1). From 2015 (0.38) till 2018 (0.39), the revealed downward trend affirms that the withdrawal of banks from the market has deteriorated the level of quality and usage of financial products and services. Financial inclusion declined during the cleaning up of the banking system in 2014–2016, just as it did after the global financial crisis in 2009–2010. Despite the development of the payment infrastructure, there is a need to diversify access, increase quality, and quicken the usage of financial products and services due to existing distrust in national financial institutions. Improving financial literacy and consumer protection, and closing regulatory gaps in the non-banking sector are seen as ways to enhance financial inclusion. Thus, financial regulators should establish an upward trend in financial inclusion that will ensure full access to formal financial services and will not adversely affect the stability of financial system.

Highlights

Nowadays, financial inclusion is one of the critical drivers of socio-economic development, as evidenced by the growing interest of governments in research concerning its various aspects and preconditions, as well as strategies for its implementation
This paper has estimated the level of financial inclusion of the Ukrainian economy, which remains medium
Upon the research results, during 2008–2020, the dynamics of the three-dimensional aggregate index of financial inclusion with the equivalent weight of sub-indices was fluctuant during the crisis and post-crisis years

Summary

Introduction

Financial inclusion is one of the critical drivers of socio-economic development, as evidenced by the growing interest of governments in research concerning its various aspects and preconditions, as well as strategies for its implementation. Over the past three years, the Ukrainian payment infrastructure has been actively developed within the financial inclusion target, declared by the National Bank of Ukraine as a medium-term strategy (NBU, 2021). There are many violations of consumer rights, unfair business activities, and evasion of the Law on Financial Services. Consumers continue to receive calls in which fraudsters introduce themselves as employees of a bank or even the National Bank of Ukraine and provide false information about card blocking.

Objectives

Methods

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Conclusion