Determinants Of Financial Inclusion Research Articles

Financial Inclusion, Poverty, and Income Inequality: Evidence from European Countries

This study contributes to the existing literature on financial inclusion by examining the determinants of financial inclusion and studying the impact of financial inclusion on poverty reduction and income inequality in European countries. We investigate the impact of financial inclusion on poverty and income inequality in 30 European countries during 2004-2019 based on a composite financial inclusion index (FII) constructed by using principal component analysis (PCA). Then we assess the impact of financial inclusion, on poverty and income inequality, by employing the fixed effect method. The estimates reveal that, for the European countries, GNI per capita, population density, inflation, and internet users have a positive and significant impact on financial inclusion across all the regressions. Rule of law has a positive impact on financial inclusion, and the age dependency ratio has a negative impact on financial inclusion. The findings also indicate that financial inclusion is significantly correlated with lower poverty for the full sample. Lastly, the present study supports the role of financial inclusion in reducing income inequality in European countries.

The Determinants of Financial Inclusion in Pakistan

Financial inclusion is now commonly recognized as a vital ingredient for poverty reduction and improved prosperity. Adults in the world's poorest homes, on the other side, remain unbanked in increasing quantities. The characteristics that influence financial inclusion in Pakistan are examined in this article. The study has taken use of the World Bank's Global Findex database from 2017. Gender, education, age, and income are all significant factors that influence financial inclusion in Pakistan, according to the findings of this study. According to the findings, a person who is richer, better educated, and older supports financial inclusion and has a greater influence on education and income, based on Probit forecasts. Mobile banking follows the same procedure as traditional banking. The determinants of informal finance differ from those of formal finance. The government should create rules encouraging financial service providers to locate their facilities closer to users or to adopt technology that makes financial services more accessible, such as agency and mobile banking.

Determinants of Financial Inclusion of Urban Women: Evidence from Ahmedabad, India

<p class="Normal1">One of the utmost active practices is to adopt an inclusive growth policy to achieve economic growth. An inclusive growth means include the excluded population into all benefits. Financial inclusion is a financial upliftment process, to help poor, slum, backward and women to come out from the poverty trap. Financial inclusion means inclusion of excluded population to access formal financial services like savings, borrowings, insurance and pension from formal financial institutions. For constructing strong financial system, it is very necessary to know first that whether sources of financial services are actually reaching to the unreached people; the awareness among people for the formal financial services i.e., financial literacy and inclusion of the excluded population by providing banking services. Among socio-economic problems in India, gender inequality is one of the major affecting problems. A noteworthy access gap has taken place between male and female regardless of significant development in broadening access to formal financial products in the country. The main objectives of this research are to examine nature and extent of accessing major financial inclusion services including Government financial inclusion programs by urban women and to analyze the determinants of financial inclusion for urban women of Ahmedabad district (having highest urban female population in Gujarat). Primary data collection method is used through semi-structured questionnaire. Probit model is constructed to analyze the financial inclusion determinants of urban women of Ahmedabad district. Considered major financial inclusion services are opening bank account, savings, borrowings and insurance. Major finding of this study is that poor urban women are being considered as less benefitted from financial inclusion services, where in-migration, financial literacy and borrowings were found to significantly influence the participation of urban women in financial inclusion programs.</p>

Determinants of Financial Inclusion Among Dalit Women in Kancheepuram District, Tamil Nadu

Over the years many efforts were made to improve the status of financial inclusion of people. Financial inclusion measures access and usage of financial products such as deposits, loans, insurance products and quality of financial services. Financial inclusion is the process of providing financial services to the people who are outside the formal financial system. High levels of financial inclusion improve economic development and equitable distribution of wealth. This study focuses on status of financial inclusion among Dalit women in Kancheepuram district of Tamil Nadu. It was found that education level of the people; government initiatives such as general credit card, Pradhan Mantri Jan Dhan Yojana; satisfaction of the self-help group model; financial practices and financial literacy were positively and significantly associated with financial inclusion. Usage of non-bank agencies and cultural barriers were negative and insignificant.

Determinants of financial inclusion across gender in Saudi Arabia: evidence from the World Bank's Global Financial Inclusion survey

PurposeThis paper investigates the magnitude of financial inclusion in terms of ownership and usage of financial products across gender in Saudi Arabia based on the World Bank's Global Financial Inclusion (GFI) survey data.Design/methodology/approachThis study derives the data from the GFI survey, covering 1,009 respondents from Saudi Arabia. The data on ownership and usage of financial products along with demographic characteristics of the surveyed respondents have been extracted for the analysis. The data have been analyzed with the help of statistical techniques, such as the chi-square test, and marginal effects for identifying the factors affecting financial inclusion across gender.FindingsThere is a significant association between financial inclusion and gender in terms of ownership and usage. About 82% of males have reported having a bank account with financial institutions, whereas only 60% females have reported ownership of a bank account in Saudi Arabia. The ownership and usage of financial products are comparatively more among males than females. The analysis of the marginal effect of gender shows a significant and positive impact on financial inclusion, implying that males are 10 and 13% more likely to own and use financial products, respectively, as compared to females. Further, marginal effect estimates for ownership and usage for males and females indicate that a set of independent variables related to age, level of education, occupation and income level of the respondents have a significant impact on financial inclusion.Practical implicationsFinancial inclusion across gender is the first step of creating an inclusive society and empowering both males and females equally. Findings indicated an inclination of financial inclusion towards males. The research findings provide key policy insights for achieving the Vision 2030 of Saudi Arabia by strengthening gender inclusion in its growth story and ensuring the participation of females at workplaces.Originality/valueMost of the studies have included bank account ownership in a financial institution as an indicator of financial inclusion. The authors have included ownership and usage of a variety of financial products for assessing the determinants of financial inclusion across gender, which provides empirical evidence on the magnitude of financial inclusion.

Determinants of Financial Inclusion of Rural Agricultural Households in India

Using nationally representative survey data from 21,648 rural agricultural households, the current study investigates the financial inclusion level among distinct social groups across the major Indian States. The results show that 18.49 per cent of rural agricultural households have no access to formal institutions. Rural agriculture households are more financially included from the banks (78.37 per cent) compared to the post offices (15.39 per cent). Findings further exhibit the low level of financial inclusion and prevailing inequality for financial access among socially disadvantaged groups. Open category agricultural households show a relatively high financial inclusion level compared to socially disadvantaged groups. A logistic regression model is applied to examine the factors influencing the degree of financial inclusion of rural agricultural households, which reveals some interesting facts. The level of financial inclusion from banks and post offices increases with education level, size of landholdings, age, and households belonging to the open category, among others. Further, the chances are high for financial inclusion of men, while the presence of post office increases the probability of financial inclusion of women.

Socio‐economic determinants of financial inclusion: An evaluation with a microdata multidimensional index

AbstractFinancial inclusion is a central theme in development policy. While it involves changes at the individual level and comprises several interrelated financial activities, most existing measures rely on macroeconomic variables. We construct an alternative index of financial inclusion using the World Bank Findex—a microdata dataset with 451,372 observations. Applying it, we first analyse the socio‐economic determinants of financial inclusion. Second, we propose a new country ranking of financial inclusion. Our findings comprise three features. First, we do not find evidence of a gender gap in low‐ and middle‐income countries. Second, richer individuals display higher levels of financial inclusion. Third, countries with high self‐employment rates exhibit lower levels of financial inclusion. Our results suggest that financial inclusion is more related to income and employment status than gender disparities, which could lead to a different approach from policymakers on promoting the inclusion of the poor into the formal financial system.

Can People Trust What They Don‘t Understand? Role of Language and Trust for Financial Inclusion

Abstract The aim of this paper is to look at determinants of financial inclusion through the lens of comprehension of financial concepts and financial language. Specifically, we are interested in which factors are important should this comprehension be absent. We show that, in the context of finance, communication is an important transmission channel through which individuals are encouraged or discouraged to participate in the financial system. We argue that the unfamiliarity with products and the complexity of language used in the banking sector tend to limit trust granted to financial institutions. We test the hypothesis that linguistic diversity is a strong instrument for the impact of the lack of communication on trust. Applying Ordinary Least Squares and probit regression, quantile regression, and instrumental variables to cross country and individual-level data, we show the importance of individual and cultural characteristics and demonstrate the role of trust and communication for financial inclusion. The outcome is consistent for different model specifications.

Determinants of Financial Inclusion: A Panel Data Approach

Determinants of Financial Inclusion: A Panel Data Approach

Financial Inclusion: Globally Important Determinants

Abstract This paper highlights the globally-important determinants of financial inclusion. The determi-nants identified in this paper are formal account ownership; demand for formal savings; demand for formal borrowing; financial literacy and education; debit and credit card usage; the need to receive remittances from family and friends; size of the financial system; number of automated teller machines (ATMs); number of bank branches; proximity to a bank; availability and access to mobile phones; availability of digital financial products and services; technology infrastructure; government policy; culture and traditional belief systems; national financial inclusion strategy and implementation; and direct legislation.

The determinants of Financial Inclusion and Digital Financial Inclusion in India: A Comparative Study

The access to the Önancial services and digital financial services in India has not yet transformed into their frequent use. Therefore, the present paper provides a comparative analysis of the individual level determinants for few main indicators of the two main dimen- sions of Önancial inclusion and digital Önancial inclusion: access and use, based on binary probit regression analysis using World Bankís 2017 Global Findex data. The paper concludes that education and workforce participation are positively associated with the access to Ö- nancial services and digital financial services and also with the use of most of the financial services and digital financial services. Another interesting result is that being a woman and poor reduces the probability of using mobile banking but do not a§ect traditional banking.

Factors That Matter for Financial Inclusion: Evidence from Sub-Sharan Africa - The Zimbabwe Case

The study intended to investigate the factors that are important in influencing the financial inclusion of smallholder farming households in Sub-Saharan Africa with a specific focus on Zimbabwe. Motivated by the fact that there is an increase in the evidence of the importance of financial inclusion in fighting poverty and the fact that by merely having a bank account, financial inclusion cannot be guaranteed, the study went further to interrogate factors that influence smallholder farmers to have a transaction account, to borrow and to have insurance. Since the dependent variable of financial inclusion had more than two categories, with three unordered categories, transaction account, savings/credit account, and insurance, the multinomial logistic regression was used to estimate the determinants of financial inclusion from these three categories of the dependent variable. The multinomial logit model results, with insurance as the reference category, indicated that the size of the household, transaction costs, gender and agricultural extension service were the factors influencing the demand for a household to open a transaction account. On the other hand, off-farm income and age of the household were the only two factors significantly influencing households to borrow. Therefore, it is imperative for, the government of Zimbabwe to come up with more policies that encourage farmers to participate in the formal financial market as financial inclusion can help to fight poverty and the general developments of societies.
 
 Received: 28 April 2021 / Accepted: 31 August 2021 / Published: 5 November 2021

LES DETERMINANTS DE L’INCLUSION FINANCIERE AU TOGO

This study analyzes the determinants of financial inclusion in Togo. Departing from the traditional literature which considers financial inclusion as a static phenomenon, this study models it as a dynamic four-step process and identifies its determinants on the basis of an ordered and sequential logit model applied to the data of Finscop survey with a sample of 5197 individuals. The results obtained from the ordered logit model indicate that financial inclusion in Togo is mainly determined by individual characteristics such as sex, education, age, income, area of residence, professional situation, marital status, household size and degree of trust in financial institutions. However, these characteristics differ from step to step using sequential logit, similarly depending on gender, and geographic area. This study is the first attempt to understand the determinants of financial inclusion in Togo. It also has the advantage of being in the class of the first empirical studies that model financial inclusion, as a dynamic process. Finally, this work paves the way for strategies that make financial inclusion a tool that can help increase the rate of access to financial services in Togo.

Financing Agribusiness: Potential Determinants of Financial Inclusion for Smallholder Rural Farming Communities in Kenya

The purpose of this article is to empirically examine and compare the factors or determinants of financial inclusion in commercial banking institutions, microfinance banks, mobile banking platforms and table banking groups (informal banking groups) in Kenya. The data used in the study were obtained from 631 small and micro-sized (SMS) farming enterprises in Kenya. We use probit model to empirically establish the factors that determine the probability of small and micro-sized farming enterprises in accessing agricultural credit from the four major lending institutions. Also, we apply Heckman selection model to establish the determinants of agricultural credit rationing. OLS model is used to investigate the determinants of agricultural credit delinquency rates in the lending institutions. The results show that female-owned SMS farming enterprises are likely to access less agricultural credit amount from table banking groups, own small farms with no title deed and own less valued assets compared to male-owned SMS farming enterprises which access agricultural credit from commercial banks and microfinance banks. Further results revealed that household dependency ratio was a significant determinant factor in agricultural credit access from mobile banks, commercial banks and table banking groups. Additionally, agricultural credit delinquency in mobile banking is significantly reduced by distance to the banking agent. The availability of mobile banking agencies within village centres would considerably enable agri-entrepreneurs to make credit repayment within the required period.

Determinants of Financial Inclusion in Small and Medium Enterprises: Evidence from Ethiopia

The study examines the determinant factors that influence financial inclusion among small and medium enterprises (SMEs) in Ethiopia. The study uses an explanatory research design and a mixed research approach with both primary and secondary sources of data. More specifically, the study adopts a multiple linear regression model. The finding of the study reveals that; supply-side factors, demand-side factors, market opportunity, and collateral requirements have a positive effect on the firm’s access to finance. On the other hand, institutional framework factors, and the costs of borrowing negatively affect the firm’s access to finance. This study suggests concerned bodies sustain rapid and inclusive economic growth and hence eradicate extreme poverty and hunger, the policymakers must build an efficient, strong, and well-functioning financial market system that provides affordable and sustainable financial service to SMEs.

Understanding the link between government cashless policy, digital financial services and socio-demographic characteristics in the MENA countries

PurposeTo help inform the debate over whether socio-demographic characteristics are related to the use of digital technologies, the authors investigated the effects of age, gender, education, income and being in the workforce on changes in using financial digital services using panel data collected in the MENA countries during 2017.Design/methodology/approachThis study aims to identify the impact of government policy on the determinants of financial inclusion and digital payment services in the MENA region. The authors use microdata from the 2017 Global Findex database on MENA countries to perform probit estimations. The paper focuses on the role of technology adoption by government authorities in extending financial inclusion and digital payment around different people.FindingsThe authors find that poorer people (and, by association, less educated people) and the young (but less so the elderly) are disproportionately excluded from the financial system. Results confirm that better collaboration between the government and the financial sector can help to develop digital financial inclusion through the technology adoption channels. The study confirms the significant impact of the government cashless policy in advancing financial inclusion in the MENA countries, with potentially wider applicability to other developed economies.Practical implicationsPolicies to advance mobile money innovations could stimulate financial inclusion by promoting digital transaction services. The role of government authorities is imperative to harness the beneficial and sustainable gains from digitizing remittances and transfers to promote a cashless economy.Originality/valueFinancial inclusion promotes equality through a broadening of the system and government cashless policy can be a major catalyst for greater financial inclusion. It helps in the overall economic development of the underprivileged population and contributes to poverty reduction.

Examining the influence of financial inclusion on financial well-being of marginalized street vendors: an empirical evidence from India

PurposeThe study attempts to explore the determinants of financial inclusion. Subsequently, it examines the effect of financial inclusion on financial well-being of marginalized street vendors in India.Design/methodology/approachThe demand-side analysis of measuring financial inclusion with a sample of 371 marginalized street vendors is adopted. Both exploratory and descriptive research designs are employed in this study. The primary data collection is done by administering the structured interview schedule by using a convenience sampling technique. Confirmatory factor analysis (CFA) and structural equation modeling (SEM) are performed to describe the latent constructs and their hypothetical relationships with adequate empirical evidence.FindingsOut of five dimensions of financial inclusion considered for the study, accessibility, availability, usage and affordability are found to be significant determinants of financial inclusion; however, the financial literacy dimension is found statistically insignificant. Further, the study results confirm that financial inclusion contributes substantially to the well-being of marginalized street vendors.Research limitations/implicationsThe outcome of the study will facilitate all the stakeholders including policymakers and financial institutions to enact policy guidelines to ensure financial well-being of the marginalized street vendors through financial inclusion initiatives.Originality/valueFinancial well-being through financial inclusion is possible even without the effect of financial literacy from the unorganized sector perspective specifically marglianized street vendors. Thus, it adds new dimension to the existing literature on demand side analysis of measuring financial inclusion.

Financial inclusion, mobile banking, informal finance and financial exclusion: micro-level evidence from Morocco

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.

Financial inclusion of individuals who arrived as refugees to the United States

AbstractWe study determinants of financial inclusion for individuals with a refugee background (refugees) from over 30 countries residing in Utica, New York. We find that greater financial inclusion is associated with refugees who are male, more educated, employed, richer, older at time of migration, have better language skills, and have lived in the country longer. Financial inclusion also increases with the degree to which refugees trust financial institutions and decreases with the degree to which refugees' close friends are from the same ethnic group. Country of origin, religious affiliation, and religiosity are strong predictors in many specifications.

Financial literacy in the digital era: new opportunities and challenges

Increase of access to financial services (financial inclusion) and overcoming the new digital gap are the priority task of the national governments, which entails the development of state programs and implementation of various initiatives The subject of this research is the financial literacy and instruments for its improvement in the conditions of new digital reality. The question is raised on the need for reconsideration of the financial literacy in the digital context, and implementation of the more extensive multidimensional approach towards its definition. The authors present the results of scientific research conducted in different countries, which prove that financial and digital literacy are the key determinants of financial inclusion. The analysis of foreign practice of introducing the programs aimed at the improvement of financial literacy of the population leads to a number of practically valuable conclusions, namely high potential and effectiveness of the projects that use interactive technologies. The scientific novelty lies in formulation of recommendations that would contribute to more effective implementation of the programs intended for improving financial literacy of the population: targeted programs for improving financial literacy adapted to the needs and level of knowledge of a specific target audience; interactive content that develops both, financial and digital literacy in the context of using financial products. Special attention is given to the formation of competencies for secure use of digital financial products, information awareness of the participants of the programs on the fraudulent schemes. The increase of financial literacy is considered as an indirect financial protection of the consumers.