Financial Inclusion Agenda Research Articles

Challenges of Microfinance and Financial Inclusion for Development Using WASPAS Method

Financial inclusion refers to the process of ensuring that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit, and insurance – delivered in a responsible and sustainable way. The concept aims to eliminate the barriers that exclude people from participating in the financial sector, enhancing their ability to improve their economic conditions. Microfinance is a critical tool within the broader financial inclusion agenda. It involves offering financial services to low-income individuals or those who do not have access to typical banking services. These services include microloans, savings accounts, insurance, and money transfers. Microfinance institutions (MFIs) cater to people who are traditionally excluded from the formal banking sector, helping them to start or expand small businesses, manage risks, and improve their quality of life.One of the primary significances of researching financial inclusion and microfinance is their critical role in promoting economic development. By providing access to financial services, individuals and small businesses can engage in economic activities that contribute to the overall growth of their communities and economies. Microfinance allows entrepreneurs to start or expand small businesses, which can lead to job creation and increased productivity. Understanding the mechanisms and impacts of these financial services helps policymakers and stakeholders design better programs to stimulate economic development, particularly in underserved regions. Alternative taken as Program A, Program B, Program C, Program D, Program E. Evaluation Preference taken as Loan Disbursement Rate (%), Client Outreach (thousands), Loan Default Rate (%), Operational Costs (% of budget). The results Program E Advertising achieved the highest rank, while Search Program B received the lowest rank being attained. “The value of the dataset for Financial Inclusion and Microfinance, according to the Weighted Aggregated Sum Product Assessment Program E Advertising achieves the highest ranking.”

BOARD GENDER DIVERSITY AND FINANCIAL INCLUSION: EVIDENCE FROM THE GLOBAL MICROFINANCE INDUSTRY

This study examines the effect of board gender diversity within Microfinance Institutions (MFIs) on their ability to acquire new borrowers, a key indicator of progress toward achieving the financial inclusion agenda of the Sustainable Development Goals (SDGs). Utilizing an unbalanced panel dataset consisting of 1,450 unique MFIs operating in 106 countries over the period of 2010–2018, this study deployed various econometric models, including the Pooled Ordinary Least Squares (POLS), Random Effects Model (REM), and Fixed Effects Model (FEM). Rigorous measures, including endogeneity-corrected techniques, alternative proxies for board gender diversity such as the BLAU index and sub-sample analyses were applied to ensure the reliability and robustness of our results. The study’s findings indicated a positive association between board gender diversity and financial inclusion within MFIs. However, the statistical significance of these outcomes varied depending on the specific analytical techniques, sub-samples, and alternative proxies used during the research. Overall, this study offers implications for practitioners and policymakers, encouraging women’s participation in the boardrooms of MFIs to advance the financial inclusion agenda of the SDGs.

The financial inclusion agenda: Examining the role of conventional banks in deepening access to formal credit

Using a unique district-level panel dataset, we investigate the effect of banking system penetration on financial inclusion in Ghana. To purge potential endogeneity bias in the underlying relationship, we exploit a change in the policy environment of the Ghanaian banking system to instrument for bank branch expansion. We show, first, that the switch from the compartmentalized system of banking to the universal banking system in Ghana has resulted in an expansion of banks’ branch network, which has benefited hitherto financially less developed districts. Second, our instrumental variable evidence suggests that banking system penetration promotes financial inclusion—notably, access to bank credit and to formal credit. The results of this paper provide important insights into the role of policy in enhancing financial inclusion.

Review of Behavioural Intention to use Mobile Financial Services

Massive adoption of technology-driven financial services is key to successful financial inclusion agenda. This qualitative-empirical review examined the factors that influence users’ behavioural intention to use mobile financial services. This empirical review was conducted by searching various database-resources including Google Scholar, and ProQuest; reviewing past meta-analytical studies, and snowballing. Citations were also collected from previous empirical reviews. Key words used in the various searches include “mobile financial services”, “technology adoption”; “mobile banking”, “mobile money”, “mobile payments”, “m-banking”, “technology acceptance”, “system adoption”, “technology acceptance model”, “user acceptance”, “behavioural intentions”, and “system user intentions”. The searches generated results that were reviewed for relevance. The review established the three dimensions of mobile financial services: mobile banking, mobile payment, and mobile money services (with mobile banking being the most widely explored of the three). It is hoped that this empirical review would significantly contribute towards addressing some of the research gaps identified in previous empirical studies.

Implementing unique identification technology: The journey and success story of Aadhaar in India

The Aadhaar number has become a basic identification system for all Indian residents and is used for all purposes from air ticket booking, to ration cards and opening bank accounts. The purpose of Aadhaar in India started with a basic need to provide access to public services and Government benefits. But currently, Aadhaar is considered as a high potential, technology-enabled unique identification system that upholds the financial inclusion agenda for the Government of India. Further, its usage is growing day by day like making UPI transactions with only the Aadhaar number and linking many financial systems with Aadhaar. Implementing Aadhaar in a massive country like India is not an easy task but the Unique Identification Authority of India achieved it effectively with strong backing from the Government. This case discusses the origin, features, penetration and growth of Aadhaar and its role in financial inclusion. It also examines similar identification systems in other countries. The case deliberates the challenges faced in the implementation of Aadhaar in India.

Does taxation of digital financial services adversely affect the financial inclusion agenda? Lessons from a developing country

Despite strong evidence of the critical role of mobile money technology in deepening financial inclusion, the impact of taxing mobile money transactions on digital and financial inclusion remains an unexplored area of research. By drawing on the Unified Theory of Acceptance and Use of Technology model, this research presents a rich insight into the determinants of mobile money adoption and the moderating effect of taxation (e-levy) on mobile money adoption. The purposive data sampling technique was employed to collect data from 287 mobile money users. The structural equation modeling – partial least square method was applied to test the hypotheses of this study. The findings show that performance expectancy, effort expectancy, social influence, and facilitating conditions significantly influence behavioral intention. Consequently, behavioral intention shows a significant relationship with the actual use of mobile money. Furthermore, regarding the moderating effect of taxation, the findings show that taxation negatively and significantly influences the actual use of mobile money. Finally, the implications of the results to tax policymakers (government) and mobile money operators have been discussed.

Employee turnover and the social outreach (breadth): international evidence from the microfinance industry

PurposeEarlier studies on employee turnover have invested enormous scholarly mileage to understand and address human resource challenges. Considering the substantial evidence on the negative and non-linear relationship between employee turnover and firms’ performance, the purpose of this study is to investigate the effects of employee turnover on the social outreach (e.g. breadth of outreach) of microfinance institutions (MFIs), also known as the financial inclusion agenda of the Sustainable Development Goals.Design/methodology/approachTo achieve the study objective, the authors collected unbalanced panel data of 1,391 MFIs, covering a total of 96 economies and a period of 2010–2018. The organizational and macroeconomic data were obtained from the World Bank’s Mix Market and World Development Indicators databases, respectively, and subsequently analysed using the pooled ordinary least squares, random effects model, fixed effects model and generalized method of moments.FindingsOverall, the authors found that employee turnover has a positive impact on the social outreach of MFIs, which suggests that employee turnover reduces organizational blindness and groupthink, potentiates efficiency gains and minimizes retention costs. On the contrary, this study does not find evidence of a non-linear effect of employee turnover on the outreach objectives of MFIs. Meanwhile, these effects were observed to vary depending on the proxy, sub-samples and techniques used in the analysis.Originality/valueMotivated by the paucity of literature, the study has uniquely investigated the effect of employee turnover on the social outreach objective of MFIs by using relatively recent and global-level data. The study findings can help managers and the human resource departments to make optimum decisions about employee turnover management.

A study on financial literacy of students

One of the causes of financial crises is identified as lack of financial literacy. India, a developing country, is entering the second phase of financial sector reforms. The integration of the economy with the world economy will increase further, with the risk of a world crisis impacting the Indian economy. In India, there is a large unorganized sector, and the government is withdrawing from pension schemes even in the organized sector. In the absence of any social security scheme, the Indian economy will be in a state of major instability after the demographic dividend starts decreasing after 20 or 25 years. Thus, the improvement of financial literacy in the country is imperative for the financial well-being of individuals and for the economy. The significance of financial literacy as a transformation agent on the financial inclusion agenda of the nation is undisputed in academic and practitioner circles. This paper provides a review of the definitional and measurement aspects of financial literacy, and an attempt is made to identify the various aspects involved in defining and measuring financial literacy in India. The researcher examined the level of financial literacy of collegegoing students and analyzed their financial behavior using mean score analysis. The research found that the borrowing behaviors of the students are high, and their interest in learning the life skill of financial management is also high.

Fault Lines in Financial Inclusion

Abstract Financial inclusion has been a global development policy priority over the last two decades. Financial inclusion involves providing access to basic financial services and the use of basic financial services to improve the welfare of individuals, households, and businesses. This article identifies the fault lines or vulnerabilities in the way financial inclusion is achieved. These fault lines or vulnerabilities arise from the overreliance on profit-oriented financial institutions to achieve financial inclusion, the multiple self-interest in the financial inclusion agenda, the unsustainability of policyinduced demand for basic financial services, the lack of safety net to protect poor banked adults from systemic risk events, and the prevalence of financial inclusionwashing that allow agents to misrepresent their support for financial inclusion. The article argued that the world needs to pay serious attention to these fault lines and seek solutions that promote financial inclusion in a sustainable way. The ideas in this article can help policymakers, academics, practitioners, and researchers in assessing the fault lines created by financial inclusion policies and strategies as this is the first step to finding solutions to address the fault lines.

Datanalysing the uninsured: The coloniality of inclusive insurance platforms

This article explores the rise of digital platforms for insurance coverage related to the financial inclusion agenda in developing and emerging economies. The current literature focuses mostly on the emergence and implications of Superplatforms based in core capitalist economies. Combining insights from studies on platform capitalism with post/decolonial scholarship in international political economy, we argue that the rise of inclusive insurance supported by platforms relies on three dimensions of what we term datanalysing: (a) an interoperable and safe digital infrastructure legitimized by international standards; (b) the collection of racially hierarchized data; and (c) the appropriation of data by objectifying the targeted individuals. As datanalysing turns populations from the Global South into profitable resources from which extracting financial value, it sustains colonial practices censing and classifying subjugated populations. We illustrate our argument with the case of motor insurance coverage. Our analysis offers a wider empirical understanding of the global expansion of platform capitalism to previously unmarketable populations. We suggest that research should place greater emphasis on socio-historical dimensions to highlight the inconsistent and exploitative character of the inclusive insurance agenda.

The United Nations Sustainable Development Goals, Financial Inclusion Agenda and the Efficacy of Security Interest over Movable Assets: The Case of Micro, Small and Medium Enterprises in Nigeria

Access to credit facility by the micro, small and medium enterprises (MSMEs) in the developing countries remains a mirage without a functional, inclusive and efficient system of credit and security. The realisation of the sustainable development goals for rapid growth and economic development in those countries depends on a viable and effective financial inclusion agenda as encapsulated in one of the targets of Goal Number 9 of the United Nations Sustainable Development Goals (SDGs). As an enabler of many of the developmental goals of the UN, the financial inclusion agenda provides the link with sustainable development. This article interrogates how security over movable assets will meet the reasonable expectations of the MSMEs in Nigeria and actualise consistent funding of growing businesses.

Mobile money for financial inclusion and saving practices: empirical evidence from Ghana

PurposeThe purpose of this paper is to explore the impact of mobile money on savings and saving practices among individuals in Ghana.Design/methodology/approachEmploying an instrumental variable (IV) estimation technique, comprehensive data from the Financial Inclusion Insight (FII) Survey is used, implemented by InterMedia company and conducted from December 2014 to January 2015 in Ghana.Findings It is found that mobile money use generally increases savings and saving behavior among individuals in Ghana. In particular, our results show that mobile money use increases the probability of individuals saving for business startup or business expansion, child's education and emergencies. Also, for the heterogeneous effects of mobile money use on saving practices, strong evidence that the use of mobile money is more pronounced in rural areas than in urban centers is found.Originality/valueTo the best of our knowledge, no empirical study has been done on Ghana to extensively examine how mobile money affects various saving practices in Ghana as it is done in this paper. The paper highlights the need for ongoing enhancement of financial inclusion in rural areas by the government of Ghana and other stakeholders to boost savings among rural folks, while not neglecting that in urban areas. Generally, the findings for this paper support the use of mobile money as a tool for enhancing the financial inclusion agenda by policymakers in Ghana and many other countries around the world.

Remittances and the reconfiguration of rural finance in Nepal (1900–1960)

Remittances have been a crucial component in the lives of Nepali people since the beginning of the 20th century. Despite their importance, remittances only gained the attention of scholars and policymakers towards the end of the century. More recently, remittances have become linked to the global financial inclusion agenda in what has been termed the ‘financialisation of remittances’. This article proposes a temporal and spatial shift to explore the historical antecedents of the financialisation of remittances (1900–1960) and beyond the Global North to focus on the context of rural Nepal. I investigate the role of remittances in the reconfiguration of rural finance and social hierarchies. I propose the concept of ‘debt-reign’ as a political formation that allows to analyse the links between statecraft technologies, debt and caste relations, and remittances. Drawing on document analysis, expert interviews and a focus group discussion, the article shows the transformative power of remittances to bring about: the (re)negotiation of debt relations; an emancipation from debt relations; and the reconfiguration of social hierarchies. Together, these dynamics contribute to a reconfiguration of social power, challenging the domination of certain castes and rural elites and re-stratifying financial and social hierarchies. The analysis also highlights the colonial legacies of remittances that prepared the ground to introduce formal financial infrastructure in rural areas which is fundamental to contemporary financialisation.

Remittances, development and financialisation beyond the Global North.

In the context of the global financial crisis and the crunch in development financing, remittances have become linked to the financial inclusion agenda in what has been termed as ‘financialization of remittances’ (FOR). This special issue brings together seven articles that analyze the socioculturally specific histories and the everyday manifestations of the FOR in the Caribbean, Central America, Colombia, Ghana, Mexico, Nepal and Senegal. The contributors engage in a transdisciplinary conversation, mobilizing insights from feminist, postcolonial, poststructural and political geography theories. They propose two majors shifts for financialisation analysis: towards an investigation beyond the global North and towards taking seriously failures, contradictions and contestations of financialisation processes. By doing so, the special issue contributes to financialization research in five major ways: to expose colonial legacies of remittances and their financialization; to challenge the supposedly neutral character of the FOR by revealing the caste, gendered and racialized power relations in financialization processes; to destabilizes the notion of the universal individual financial subject and show how multiple financial subjectivities are constituted in constellations; to document the complexities, ambiguities, contradictions and failures of financialization processes and the (everyday) contestations they face; and to show how remittances and their financialization are implicated in reconfiguring authorities, citizenship and social dynamics. The contributions propose relational understandings of financialization that conceptualize the co-constitution of economic, political and sociocultural dimensions of financialization across and beyond the North-South divide.

Regional Rural Banks (RRBs) Contribution to Agriculture Finance: A Critical Analysis of the Performance of RRBs in India using DEA and Structure Equation Modeling

Among the financial inclusion agenda, financial provisions for the agriculture and rural development sector are more important. In this context, Regional Rural Banks (RRBs) were promoted to support agriculture and rural finance in 1975. This paper is an attempt to evaluate the performance of RRBs concerning their financial performance as well as their performance in meeting the objective of supporting agriculture, microenterprise, and weaker sections finance. This paper has adopted two-stage processes of analysis. In the first stage, Data Envelopment Analysis (DEA) analysis was conducted to evaluate the efficiency of RRBs on four different models i.e. Financial performance, priority sector performance, loans to weaker sections, and agriculture finance. In the second stage, Partial Least Square Structural equation modeling (PLS-SEM) was performed to identify the significance of the linkage between the agriculture, microenterprise, weaker sections, and non-performing assets in defining the financial performance of RRBs. The study's findings suggested that financially RRBs have been more efficient compared to the agriculture finance and loans to weaker sections. The results depict a strong positive significant relationship between agriculture and microenterprise finance on the financial performance of the RRBs. However, the results also depict a non-significant relationship between the weaker sections and non-performing assets on financial performance. This study suggests that RRBs were the victims of poor benchmarking as they were compared with the traditional banking system. They need to be given additional support to promote agriculture and rural lending.

The Promise of Financial Inclusion for Developing Economies

Financial inclusion is considered to be a tool to tackle poverty, promote equality, and support economic growth. Sustainable development goals can be achieved through financial inclusion as it implies access to and availability of financial services to disadvantaged groups, especially in developing economies. Despite the fact that financial inclusion is included in the political agenda of many countries, the studies are still scarce in particular from different perspectives and contexts. This paper outlines the characteristics of financial inclusion and aspects shaping financial inclusion. Moreover, implications of Financial Inclusion for developing and emerging economies are investigated and digital technologies in FinTech for financial inclusion are explored. Finally, the recommendations are suggested to eliminate poverty and ensure equality through the financial inclusion agenda.

Factors Influencing Islamic Financial Inclusion in Indonesia: A Structural Equation Modelling Approach

The study examines the determinants of Islamic financial inclusion in Indonesia by applying Structural Equation Modelling (SEM) and Binary Logistic Regression. Through a field survey across Indonesia’s five main islands, the study gathered responses from 291 primary data samples. The study discovered that Islamic financial inclusion in Indonesia is determined by both the demand and supply sides. Two most significant determinants of Islamic financial inclusion in Indonesia from the demand side are financial literacy and social influence while on the supply side is human capital. The study also includes references and policy recommendations to help Indonesia’s financial regulators in formulating effective policies and strategies to foster the country’s Islamic financial inclusion agenda.

THE DETERMINANTS OF MICROFINANCE INSTITUTIONS EFFICIENCY: THE ROLE OF WOMEN BORROWERS

Microfinance institutions (MFIs) are instrumental in enabling the economic empowerment of women. We examine the efficiency and performance of 84 Indian MFIs from 2016 to 2018 using a two-stage double bootstrap approach. Our results show that MFIs with increased outreach and actively target female borrowers achieve higher efficiency. Furthermore, we find larger MFIs and higher leverage intensity to be positively associated with efficiency. Government policies should be encouraged to support current MFIs to grow larger, actively target female borrowers and increase outreach to the poor to support India’s financial inclusion agenda and facilitate the economic empowerment of women whist revitalizing less efficient MFIs.

Unlocking the Potential of Fintechs for Financial Inclusion: A Delphi-Based Approach

The financial sector is experiencing an accelerated process of transformation shaped by fintechs, which opens an important window of opportunity to increase financial inclusion in emerging markets, such as Brazil, with high financial exclusion. Thus, this article investigates, through a Delphi approach involving fintech professionals, the potential of fintechs to enable financial inclusion in emerging markets, using Brazil as a proxy. The analysis carried out identified three domains related to fintechs that have the potential to impact financial inclusion: (i) fintechs can serve niches of people without a bank account in the traditional financial market, (ii) fintechs can reduce costs for clients through increased competition, and (iii) fintechs can offer financial services in remote locations, far from traditional financial institutions. Thus, with the objective of developing a public agenda of financial inclusion through fintechs, the article proposes four lines of public policies: (i) expansion and modernization of mobile and internet infrastructure, (ii) improvement of the population’s financial and digital education, (iii) implementation of a trustworthy environment for the fintech clients, and (iv) development and enforcement of an effective legal and regulatory framework for fintechs. These policies, if implemented, can benefit people excluded from the financial system around the world.

World Bank experiments in housing: microfinance for self-organised housing in Mexico in the era of financial inclusion

Framed by an agenda of financial inclusion, housing for and by the poor has become a field of experimentation. These experiments have included the introduction of small, non-mortgage loans dedicated to the construction and improvement of self-organised housing. This paper provides a close reading of how such housing microfinance schemes have been introduced in Mexico with the support of the World Bank since the early 2000s. We highlight how the roll-out of the new schemes has been facilitated through several loans aimed at structural reforms of the Mexican housing sector. Yet while wrapped in a pro-poor discourse, it ultimately served the goal of expanding housing finance to low and middle-income groups. The ensuing implementation, however, was a complex and protracted process. We argue that it was characterised by experimentation, negotiations, and failures, both within state institutions as well as between state actors, World Bank representatives, and civil society. The conclusion presents Mexico’s housing agendas as a field of finance-induced experimentation, in which institutional ruptures resulting from the changes in government rub against the long-term engagement of local housing associations and activists. The latter have played an important role in setting noteworthy limits to financially driven interests.