Dimensions Of Financial Inclusion Research Articles

The role of financial inclusion, technology innovation, energy and environmental degradation in determining sustainable growth in Asia

AbstractSustainable growth is a top priority for all economies as they work towards creating a prosperous and resilient future for current and future generations. This study empirically explores the important role of financial inclusion (FI), energy consumption, technological (TECH) innovation and environmental degradation in the economic growth of 13 selected developing Asian countries from 2000 to 2021. The feasible generalized least squares method is used for empirical examinations due to the nature of the data. The study focuses on three dimensions of FI: penetration, usage and availability of financial institutions. The results show that FI, energy consumption and TECH innovation encourage economic growth, whereas ecological footprint discourages economic growth in selected Asian countries. The empirical findings highlight the importance of promoting sustainable growth in Asia through enhanced FI, TECH innovation, sustainable energy practices and environmental conservation. Governments in these countries should prioritize strengthening the financial sector, investing in research and development and implementing effective policies to ensure a clean and green environment. This will lead to inclusive and environmentally responsible development that benefits both current and future generations in the region.

The relationship between foreign direct investment and financial inclusion in MENA countries: Evidence from the General Method of Moments

The study delves into the nuanced interaction between foreign direct investment (FDI) and financial inclusion in the MENA region, spanning the years 2003 to 2022 and employing the General Method of Moments for rigorous analysis. Its primary objectives are to elucidate how financial inclusion influences FDI and to examine the mediating role of economic growth and inflation as key factors. Key findings reveal a robust positive correlation between financial inclusion and FDI inflows within MENA countries. Specifically, the study uncovers significant relationships between FDI and the various dimensions of financial inclusion, including access, availability, and usage. This underscores the pivotal role of inclusive financial systems in attracting foreign investment. Moreover, the study highlights the symbiotic relationship between economic growth and FDI, indicating that heightened levels of economic prosperity attract greater investment. This underscores the importance of fostering conducive economic conditions to attract foreign capital. Furthermore, the study underscores the critical role of financial inclusion in shaping monetary policy and mitigating investment risks. By facilitating access to capital and reducing uncertainty, financial inclusion promotes transparency and stability, thereby enhancing the attractiveness of foreign markets for investment.

Exploring Financial Inclusion among Women Entrepreneurs: A Survey in Hazaribagh District, Jharkhand

Financial inclusion is a critical aspect of economic empowerment, particularly for marginalized segments such as women entrepreneurs. This research investigates the landscape of financial inclusion among women entrepreneurs in Hazaribagh District, Jharkhand, aiming to identify challenges and opportunities for enhancing their financial participation. Through a comprehensive survey-based approach, this study explores various dimensions of financial inclusion, including access to financial services, utilization patterns, and perceptions among women entrepreneurs in the region. In Hazaribagh District, Jharkhand, where entrenched gender norms often limit women's economic opportunities, understanding the status of financial inclusion among women entrepreneurs becomes imperative. Previous studies suggest significant disparities in access to finance, hindering the growth of women-led businesses. This study seeks to address this gap by conducting a survey to assess the extent of financial inclusion among women entrepreneurs in Hazaribagh District. A structured questionnaire was designed to collect data from a sample of women entrepreneurs operating across various sectors in Hazaribagh District. The questionnaire encompassed sections on demographic details, access to financial services, borrowing and saving behaviors, financial literacy, and perceptions of financial institutions. A purposive sampling technique was employed to select respondents, ensuring representation from diverse socio-economic backgrounds. Data collection occurred over a specific timeframe, and responses underwent analysis using descriptive statistics and thematic analysis. Analysis of the survey data revealed significant insights into the status of financial inclusion among women entrepreneurs in Hazaribagh District. Specifically, 72% of respondents reported limited access to formal financial services, citing factors such as distance to banking institutions and lack of awareness as primary barriers. Moreover, 58% of women entrepreneurs relied on informal sources of credit, indicating a substantial gap in formal financial engagement. Despite these challenges, 85% of respondents expressed a willingness to engage with formal financial institutions if provided with suitable products and services tailored to their needs. The discussion underscores the importance of targeted interventions to enhance financial inclusion among women entrepreneurs in Hazaribagh District. Strategies such as mobile banking initiatives, financial literacy workshops, and microfinance programs emerge as potential avenues for addressing existing gaps and empowering women economically. Furthermore, collaborative efforts involving government agencies, financial institutions, and non-profit organizations are essential for creating an enabling environment conducive to women's entrepreneurship development. This research delivers valuable insights into the state of financial inclusion among women entrepreneurs in Hazaribagh District, Jharkhand. By pinpointing barriers and opportunities, it provides a foundation for evidence-based policy interventions aimed at advancing women's economic empowerment. The findings underscore the significance of holistic approaches that tackle not only access to finance but also socio-cultural factors shaping women's entrepreneurial endeavors. Moving forward, sustained efforts are warranted to foster an inclusive financial ecosystem that empowers women entrepreneurs to thrive and contribute to the socio-economic fabric of the region. In conclusion, this study underscores the urgency of addressing the financial inclusion gap among women entrepreneurs in Hazaribagh District and offers actionable recommendations for policymakers, practitioners, and stakeholders committed to promoting gender equality and inclusive economic growth.

Financial Inclusion and Its Ripple Effects on Socio-Economic Development: A Comprehensive Review

This study provides an overview of the different dimensions of financial inclusion, its socioeconomic impacts on society’s sustainable development, and future research agendas. Initially, 620 studies were identified using Scopus and other databases, employing keywords such as financial literacy, financial inclusion, financial capability, women’s empowerment, fintech, artificial intelligence, financial accessibility, sustainable development goals, and economic growth. After refinement based on focus and relevance, 325 papers were analyzed in detail for review, primarily focused on India and emerging economies. This review highlights that access to finance by untouched segments of society is essential for sustainable and socio-economic development in developing economies. The official banking system, an effort by the government to assist the financially disadvantaged, can incorporate the impoverished into a formal financial system through campaigns and credit system reforms. Socioeconomic programs reinforce one another and foster the development of children, women, families, and society. This research paper undertakes a systematic literature review primarily focused on relevant articles in broad areas of financial inclusion and its impact analysis and offers a valuable agenda for future research.

Does financial inclusion enhance per capita income in the least developed countries?

Financial inclusion is a key factor for economic growth in most developing countries. This paper examines the relationship between financial inclusion and Gross Domestic Product (GDP) per capita in the Least Developed Countries (LDCs) using panel data for the period 1990–2021. The empirical evidence suggests that financial inclusion is indeed related to economic growth in the LDCs. We consider different dimensions of financial inclusion: usability (% of bank credit to bank deposits), accessibility (commercial bank branches), concentration (% of concentration of banks), and availability (depositors with commercial banks) to determine which has a greater effect on economic growth in the countries analyzed. Therefore, we assess which dimensions of financial inclusion are a better tool to improve the economic situation in the poorest countries in the world. While we conclude that all dimensions of financial inclusion have a positive effect on economic growth, in the expected direction, we find that not all dimensions affect economic growth similarly. The dimensions ‘accessibility’ and ‘concentration’ are robustly associated with economic growth, while ‘usability’ and ‘availability’ produce a significant but relatively lesser effect in the LDCs.

Financial inclusion and monetary policy effectiveness in a monetary union: Heterogenous panel approach

AbstractWe examine the nexus between financial inclusion and inflation targeting monetary policy effectiveness in West African Economic and Monetary Union countries by employing a heterogenous panel approach that enables us to delineate the responses to policy innovations related to idiosyncratic country‐specific shocks, common shocks, and composite shocks. We find that these shocks significantly affect inflation and financial inclusion but with varying magnitudes, signs, time of responses, and persistence. We further demonstrate that inflation targeting monetary policy is differently associated with the various dimensions and indicators of financial inclusion. Overall financial inclusion shocks temporarily increase inflation; deposit shocks reduce inflation; and credit shocks increase inflation. Central bank policy rate differently responds across time horizon to overall financial inclusion shocks; and it increases due to credit shocks highlighting that the monetary authority responds to credit shocks by implementing contractionary monetary policy. Our results highlight that monetary policy aimed at promoting inclusive financial services and responses of monetary policy to financial inclusion should be specific to the dimensions of financial inclusion.

FINANCIAL INCLUSION: BRIDGING THE GAP FOR SUSTAINABLE DEVELOPMENT.

This paper examines role of financial inclusion for sustainable development. Financial inclusion has emerged as a critical driver for economic growth and poverty mitigation worldwide. This research paper explores the multifaceted dimensions of financial inclusion, aiming to understand its importance, challenges, and potential impact on sustainable development. The study explores into the various strategies, technologies, and policies employed globally to enhance financial inclusion, with a focus on both developed and developing economies. Financial inclusion stands at the forefront of sustainable development, serving as a catalyst for economic growth, poverty alleviation, and social progress. This research paper delves into the multifaceted role of financial inclusion in fostering sustainable development. By examining the existing challenges, exploring innovative solutions, and assessing the broader implications, the paper aims to provide insights into how bridging the financial inclusion gap can contribute to a more sustainable and equitable future.

Fostering Rural Development through Improved Financial Inclusion in Thoothukudi District: The Involvement of Commercial Banks.

This research delves into the dynamics of economic growth and development in Thoothukudi District, Tamil Nadu, India, with a specific focus on the role of commercial banks in fostering financial inclusion and rural development. The study explores the challenges faced by rural communities in accessing formal banking services and examines the effectiveness of current financial inclusion initiatives. Utilizing a mixed-methods research design, including surveys and factor analysis, the research identifies three dimensions of financial inclusion: Utilization, Approach, and Quality of Services. The findings indicate positive perceptions regarding the convenience and accessibility of banking services, with room for improvement in documentation processes, communication, and the adoption of digital banking. Confirmatory Factor Analysis validates the dimensions, revealing good to very good fits. The study concludes with actionable recommendations for banks to enhance their role in promoting sustainable rural development, emphasizing technological innovation, improved communication, and a customer-centric approach.

Dimensions of financial inclusion in India: a qualitative analysis of bankers perspective

Purpose This qualitative study aims to examine bankers’ perspectives regarding financial inclusion, the challenges it faces and the scope for improvement. This research proposes a financial inclusion model, considering the inputs received by bankers. Financial exclusion of different sections is an issue common to emerging countries. Design/methodology/approach Data for qualitative research were collected through interviews with bank officials. The information was gathered from 32 bankers from India’s several zones (North, South, West and East). The data were collected from bankers from different public and private sector banks. Thematic analysis was performed up to the point of saturation to study the response received from bankers. Findings Bank-related issues such as frequent computer problems, network connectivity problems, costs, a shortage of bank branches, fewer transactions through automated teller machines and a shortage of banking staff affect customers’ confidence in formal banking. Banking services are disrupted by a lack of trust in banking correspondents (BCs), as they are not regular employees of banks. Limits on daily transactions discourage high-value customers from using BCs and kiosks. The time spent on administrative formalities impacts customers. Financial inclusion is affected by availability, accessibility, usage and affordability. Digital financial literacy is essential for ease of transaction, but awareness about financial products helps protect customers from cyber scams. The findings of this research would benefit financial institutions globally in developing their businesses and helping to achieve financial inclusion and the United Nation’s sustainable development goals (SDGs). Originality/value This research paper undertakes a qualitative analysis of the views collected from bankers. Bankers are crucial stakeholders in the successful implementation of the National Financial Inclusion Policy of the Government of India. Bankers’ perspectives will be important not only for India and its researchers but also in the global context, as the UN’s SDGs focus on leaving no one behind.

A District Level Analysis of the Status of Financial Inclusion in Assam, India: Implications for Social Development Policies and Programmes

In recent years, India has placed a greater emphasis on the issue of financial inclusion. The purpose of this research is to assess the current status of financial inclusion in the various districts of Assam, India. A financial inclusion index is developed for each district in Assam by using data pertaining to three key dimensions of financial inclusion: banking penetration, availability of banking services and usage of banking services. The findings indicate that despite several initiatives to provide financial services to all, the success of financial inclusion in Assam is still far from satisfactory. Significant disparities exist in the extent of financial inclusion across the districts in Assam. While a few districts have achieved considerable success, the achievements of the majority of districts are unsatisfactory. The regression analysis indicates that literacy has a significant effect on such disparities in financial inclusion. The study argues that to enhance the efficacy and success of financial inclusion, all stakeholders need to make a concerted effort with a social development perspective.

Does financial inclusion empower women in Africa?

AbstractThis paper examines the effect of financial inclusion on women's empowerment. We contribute to the growing interest in financial inclusion effectiveness literature by conducting an empirical analysis of 42 African countries to examine the role of financial inclusion in empowering women. We also examine and compare the effectiveness of the three dimensions of financial inclusion viz. usage, access, and quality, and the first most influential indicators, based on their PCA score, of these dimensions. Our findings suggest that financial inclusion has a significantly positive effect on women's empowerment‐measured by females' human development index. Examining the relative importance of financial inclusion dimensions, we find access to financial services has a higher effect on women's empowerment. These results are robust to alternative measures of women's empowerment and financial inclusion, and alternative estimation procedures. We also find that the effect of financial inclusion on women's empowerment is higher in low and lower‐middle‐income countries compared with upper‐middle‐income countries in the region. This study provides evidence of one of the channels through which financial inclusion contributes to reducing gender inequality, and thereby enhancing economic development.

Measuring Financial Inclusion in Southeast European Countries Using Multidimensional Index of Financial Inclusion

This paper provides an insight into measuring financial inclusion through a multidimensional index of financial inclusion in Southeast European countries (SEE). We used a two-stage principal component analysis to extract dimensions of financial inclusion. Data were obtained from two sources, the World Bank Global Findex Survey (WB-GFS) data base and the International Monetary Fund Financial Access Survey data (IMF-FAS), for twelve SEE countries for the years 2011, 2014, 2017, and 2021. The research confirms that financial inclusion can be measured using two dimensions in terms of access as one factor and usage and availability as the second factor. Practical implications of this research are in ensuring an adequate measure of the level of financial inclusion for SEE countries that can be used for further research related to understanding the underlying factors contributing to financial inclusion, barriers to financial inclusion as well as the impact of financial inclusion on economic growth and poverty alleviation.

Impact of Financial Inclusion on Economic Growth and Unemployment

In the past decade, Southeast Asia has seen the development of financial inclusion, as evidenced by the growth of the penetration, availability, and usage dimensions of financial inclusion. This study analyses the impact financial inclusion has on economic growth, represented by GDP per capita growth, and unemployment using data from Indonesia, Malaysia, Thailand, the Philippines, and Cambodia. The authors employed panel data regression with fixed effect and random effect models to analyse the data. The results show that the number of commercial bank branches and outstanding loans statistically significantly affect GDP per capita growth, while the number of saving/deposit accounts does not. All three variables are shown to have a statistically significant impact on unemployment.

Developing a Multidimensional Financial Inclusion Index: A Comparison Based on Income Groups

The aim of our paper is to construct a multidimensional financial inclusion (FI) index to measure the level of FI in 91 countries across different income groups. In order to address our research problem, we use the principal component analysis method. This approach addresses the criticism of the arbitrary selection of weights and reflects the degree of financial inclusion in depth. The data are drawn from the International Monetary Fund (IMF) Financial Access Survey (FAS), the World Development Indicators (World Bank) and the Global Findex Database during the period of 2004–2020. This paper is the first to consider so many indicators of financial inclusion (13 indicators), belonging to three different dimensions of FI, in order to take into account the maximum number of aspects related to this concept. In addition, unlike previous work, this paper considers both developing and developed countries, which makes it possible to identify differences between them. The proposed index has some advantages. First, it is robust, comparable across countries and has good predictive power in tracking household microeconomic indicators (accounts and savings). It is also well correlated with macroeconomic variables such as literacy rate, poverty, GINI index, real interest rate and employers. Second, our results clearly show that, as a country’s income level grows higher, its level of financial inclusion also grows higher.

Drivers of Financial Inclusion among Cocoa Producers in the Southwest Region of Cameroon

Purpose: Financial inclusion can considerably promote cocoa production and provide a buffer for the escape from poverty traps for cocoa-growing economies like Cameroon. However, the Southwest region of Cameroon still experiences a low level of cocoa production and poverty primarily due to financial exclusion. This article explores the drivers of financial inclusion in the region. Method: A stratified multistage sampling technique was used to survey 380 cocoa producers in the main cocoa-producing areas in the region through semi-structured questionnaires. Descriptive statistics were used to analyze the socio-economic variables and the probit model to analyze the drivers of financial inclusion, subject to the three major dimensions of financial inclusion; access to, use, and quality of financial services. Results: On average, the long distance of financial institutions (9.3 km), intermediate farm sizes (2.6 ha), and low annual income (1,125,863 FCFA) negatively influenced financial inclusion resulting in just 16.6% of farmers being financially included. The findings also revealed that financial inclusion is significantly enhanced by an increase in income, farm training, the closeness of formal financial institutions (FFIs), larger household size, and small-scale production at a 1% significance level, and more years of farming experience at 5%. Moreover, 51.3% of the major constraints to financial inclusion were accounted for by lack of collateral security, distant FFIs, and low income. Implications: Reducing the distance of FFIs by establishing more institutions with considerations on collateral, increasing income through extension services like farm training, and sound agronomic practices will enhance financial inclusion. Originality: The uniqueness of this study lies in the context of the socio-political crisis during which cocoa producers were interviewed and exploring how the crisis influenced financial inclusion through a host of factors. Moreover, besides just access to credit as considered by most studies in Cameroon, the current study considers the use and quality of formal financial services as well.

A Linear Mixed Model Approach for Determining the Effect of Financial Inclusion on Bank Stability: Comparative Empirical Evidence for Islamic and Conventional Banks in Kuwait

Recently, financial inclusion and bank stability have gained attention among researchers, particularly since the 2008 global financial crisis. This study investigates how financial inclusion may have influenced bank stability given differences in banks’ structure based on operating principles (Islamic and conventional banks) during the period of 2003–2017, using Kuwait as a high-income economy case. The current paper assesses how bank stability responds to financial inclusion. This work adopts a Linear Mixed Model (LMM), which tracks variables over time while considering other time-invariant variables. The findings show that the adopted measures of financial inclusion, access and depth, are both significant and negatively related to bank stability. Furthermore, the results unveil a slight difference between the response of Islamic and conventional banks’ stability to the dimensions of financial inclusion. Additionally, the study concludes that the financial crisis had an inverse and significant impact on bank stability. However, the extent of the impact appears to have been greater on Islamic banks compared to their conventional counterparts. Based on this study, banking with more financial inclusion can improve stability if institutional quality in Kuwait is improved so that these banks can operate more efficiently.

Does Financial Inclusion Enhance Economic Output? Evidence from North Africa

The aim of this study was to investigate the impact of two dimensions of financial inclusion -namely availability of banking services and usage of banking services- on national economic output in four North African economies; Egypt, Algeria, Tunisia and Morocco. Availability of banking services was proxied by number of commercial bank branches. Usage of banking services was proxied by the sum of outstanding deposits and outstanding loans with commercial banks. National economic output was proxied by real gross domestic product. Using panel data for the years 2004-2020, panel regression analysis results revealed significant positive effects of both, availability and usage of banking services on national economic output when no time-lagging of the predictors was used, and also when the predictors were one and two year lagged. Theoretical contributions, practical implications and study limitations are discussed.
 
 Received: 24 December 2022 / Accepted: 10 February 2023 / Published: 5 March 2023

Nexus between financial inclusion and women empowerment: evidence from developing countries

Purpose This paper aims to conduct an empirical investigation of how financial inclusion impacts women empowerment. Then, it examines the overall effect of various dimensions of financial inclusion on women empowerment in developing countries using the panel data for the time period of 2004–2019. Design/methodology/approach To overcome the problem of endogeneity, the study has used a fixed-effect model, two-stage least square GMM estimation techniques. Secondary data was collected from various websites such as WDI, UNICEF and UNESCO. Findings The results show that generally, the influence of financial inclusion on women empowerment is positive, confirming previous empirical literature results. The study found evidence that if there is more financial inclusion in the country, it will benefit women by enabling them to see their qualities and skills, which make them strong and dominant. Proper development and enhancement of those skills are only possible if proper education, awareness and space are given to express oneself. According to the results, financial development, gender parity index and women's employment positively affects women empowerment, while gender discrimination has a negative impact on women empowerment. The study highlights that to encourage women empowerment in developing countries. Governments and policymakers have to carefully check and reconsider that what are the most optimal financial inclusion programs that will help to improve the women empowerment in the country. Practical implications The study highlights that to encourage women empowerment in developing countries, governments and policymakers have to carefully check and reconsider what are the most optimal financial inclusion programs that will help to improve women empowerment in the country. Originality/value The literature does not clearly show the impact of financial inclusion dimensions on women empowerment in developing countries. Therefore, there is a need to use all the dimensions of financial inclusion to check the overall impact on women empowerment in developing countries. For this purpose, the financial inclusion index is developed. A new dimension of non-life insurance is introduced, which has not been used previously by any researcher to check financial inclusion impact.

Exploring the socio-economic attributes of financial inclusion in India: a decomposition analysis

PurposeThis paper examines India's socio-economic attributes and different financial dimensions of financial inclusion (FI).Design/methodology/approachThe paper uses a principal component analysis (PCA) to build indexes related to financial dimensions. It applies the logistics regression model and the Fairlie decomposition method to determine India's socio-economic and financial characteristics of FI.FindingsBased on the logistic regression, socio-economic factors like age, gender, marital status, level of education and religion have an impact on FI. The use of financial institutions has positively contributed to the probability of FI, while the low proximity of financial service providers retards the process of FI. Fairlie decomposition concludes regional disparity and gender disparity in FI; however, the rural–urban gap in FI is not captured by the variables included in the study. The main reasons for the discrepancy are lack of education, financial literacy, the proximity of financial service providers and lack of financial institutions.Originality/valueThis paper makes two important contributions: first, it presents a micro-level analysis of FI across the socio-demographic strata of India, and second, it demonstrates the regional, rural–urban and gender disparity in FI in India.

Exploring Determinants of Financial Inclusion in Nigeria: A Literature Review through the Lens of the Theory of Planned Behavior

This paper investigates the complexities of financial inclusion in Nigeria, exploring the factors that shape its landscape. Amidst Nigeria's evolving socio-economic context, financial inclusion, characterized by access to formal financial services, plays an essential role in poverty reduction and economic growth. The study adopted a content analysis method using empirically verified literature. The study uncover the core determinants of financial inclusion within Nigeria through the lens of the Theory of Planned Behavior (TPB). By inspecting the attitudes, subjective norms, and perceived behavioral control of individuals, it aims to shed light on the complex dimensions of financial inclusion in Africa's largest economy. This research contributes to the field of financial inclusion by offering a comprehensive analysis grounded in a well-established theoretical framework and provides actionable policy recommendations inform of promoting positive attitude towards financial literacy, and harnessing social influence through community engagement, to advance financial inclusion initiatives.