Dimensions Of Financial Inclusion Research Articles

Financial Inclusion: Concepts, Issues and Policies for India

This paper lays out some of the basic concepts surrounding financial inclusion, including access to banking, digital payments and financial literacy, as well as markets for health insurance, crop insurance, agricultural credit, small firm finance, and microcredit/microfinance. It goes on to discuss various empirical and institutional studies of these dimensions of financial inclusion in the context of developing countries. The paper then outlines several recent studies for India sponsored by the International Growth Centre, which pertain to these specific aspects of financial inclusion. Finally, the paper draws lessons for policy-making and future research directions. Important considerations that emerge from the overview are the significance of social and economic context, the need to consider behavioral biases connected to situations involving time and risk, the interaction of different dimensions of financial inclusion, the importance of details of policy design, and the limited understanding we still have of many of the factors underlying the functioning of financial markets.

Financial inclusion in Punjab: An inter district analysis

Despite a tremendous development in the access of financial services, vast proportions of the population are still excluded from the formal financial institutions. The promotion of inclusive financial system is the need of the hour. There is lack of comprehensive measures that can be used to estimate the extent of financial inclusion. This paper has proposed the financial inclusion index based on penetration, availability and usage dimensions of financial inclusion across all the districts of Punjab which takes values between 0and 1. 0 denotes complete financial exclusion and 1 indicates complete financial inclusion in an economy. Since 1955 government of India has been taking efforts for inclusion such as creation of State Bank of India in 1955; nationalization of commercial banks in 1969 and 1980; initiating the Lead Bank Scheme in 1970; establishing Regional Rural Banks (RRBs) in 1975; introducing Self-Help Group (SHG)-Bank Linkage Programmer in 1992 and formulating the Kisan Credit Card scheme in 2001. However, greater access is expected to foster financial inclusion An inclusive financial system should have as many users as possible, that is, an inclusive financial system should penetrate widely amongst its users. Likewise, the availability of bank branches captures the extent of accessibility to the formal financial system only partially. The usage of formal financial services depends on others factors such as GDP per capita, development of agriculture and industries etc. Financial inclusion along with the Governmental developmental programmer however can lead to an overall financial and economic development in the state and extending the banking services to everyone in the state will be the key driver towards an inclusive growth.

Financial Inclusion Index Through MGNREGS in Virudhunagar District

Financial inclusion is the delivery of financial services through receipt of transfer payments, savings, loans, insurance, short term credit and remittance at affordable costs to sections of disadvantaged and low income segments of society. It is argued that availability of banking and payments services to the entire population without discrimination is the prime objective of public policy. Therefore, having a savings account is the only a starting point of financial inclusion. MGNREGA, the flagship programme of the UPA government, was revolutionary in its promise of inclusive growth and financial inclusion, the right to work and the dignity of labour and a rational, participatory relationship with the State. While the importance of financial inclusion is widely recognized, the literature lacks a comprehensive measure that can be used to measure the extent of financial inclusion across economies. This paper attempts to find out Financial Inclusion Index (FII) through MGNREGS. The FII is a multi-dimensional index that captures information on various dimensions of financial inclusion in one single digit lying between 0 and 1, where 0 denotes complete financial exclusion and 1 indicates complete financial inclusion.

Nexus between financial inclusion and economic growth

Purpose The purpose of this study is to assess the nexus between the vast dimensions of financial inclusion and economic development of the emerging Indian economy. Design/methodology/approach In this study, vector auto-regression (VAR) models and Granger causality test were followed to test the main research question in Indian context. The data were collected on various dimensions of financial inclusion and economic development for the period 2004-2013. Findings Empirical results and discussion suggest that there is a positive association between economic growth and various dimensions of financial inclusion, specifically banking penetration, availability of banking services and usage of banking services in terms of deposits. Granger causality analysis reveals a bi-directional causality between geographic outreach and economic development and a unidirectional causality between the number of deposits/loan accounts and gross domestic product. The results obtained favor social banking experiments in India with a deepening of banking institutions. Research limitations/implications This study is limited to the banking institutions and specifically to the emerging and developing economies. Practical implications This study analyzes the quantitative value of social banking experiments and governments’ efforts to enhance financial inclusion in terms of economic growth. Social implications Financial inclusion plays a key role in developing a strong and an efficient financial infrastructure, which facilitates the growth of an economy. The findings of the study reveal that there is a strong association between banking penetration and growth. The discussion leads in the favor of deepening of the banking institutions, and therefore, policymakers can look forward to these findings to maintain a sustainable-inclusive-developed economic system in an emerging economy like India. Originality/value This study is original in nature and includes recent evidence and efforts to promote financial inclusion in the Indian economy. The findings of this study will be of value to banks and policymakers.

Financial Inclusion and its Determinants: A Study of Bangladesh

Despite the present focus of policies devoted to promote financial inclusion in Bangladesh, the issue of its comprehensive and robust measurement, which can be used to assess the extent of financial inclusion across the country is outstanding. This study attempted to fill this gap first, by proposing a multi-dimensional index and then identifying the determinants of financial inclusion. Following similar methodology used to construct the Human Development Index (HDI), data on several dimensions of financial inclusion were used to develop an index lying between 0 and 1. The Euclidean distance formula was applied to extract the normalized indicators. The findings of the study showed that only one district in Bangladesh, that is, Dhaka achieved high stated financial inclusion, and five districts achieved medium stated financial inclusion during 2009-2013, while very low financial inclusion was observed across the remaining 58 districts out of 64 districts of Bangladesh. The empirical findings also showed that 47 districts out of 64 witnessed an improvement in the IFI score of financial inclusion. However, the extent of progress of financial inclusion in these 47 districts was found to be insignificant to change their status from low financial inclusion to medium or high financial inclusion. Among the socio-geographic variables, rural population, household size, and literacy rate; among the infrastructure variables, paved road networks, Internet ; and among the banking variables, deposit penetration were found to be the significant determinants of financial inclusion. One of the major contributions of this study is that it will invoke the governments and policy makers across the world to develop a financial inclusion index for their respective countries, and thereby undertake such policies to promote financial inclusion.

Financial Inclusion and its Determinants: A Study of Bangladesh

Despite the present focus of policies devoted to promote financial inclusion in Bangladesh, the issue of its comprehensive and robust measurement, which can be used to assess the extent of financial inclusion across the country is outstanding. This study attempted to fill this gap first, by proposing a multi-dimensional index and then identifying the determinants of financial inclusion. Following similar methodology used to construct the Human Development Index (HDI), data on several dimensions of financial inclusion were used to develop an index lying between 0 and 1. The Euclidean distance formula was applied to extract the normalized indicators. The findings of the study showed that only one district in Bangladesh, that is, Dhaka achieved high stated financial inclusion, and five districts achieved medium stated financial inclusion during 2009-2013, while very low financial inclusion was observed across the remaining 58 districts out of 64 districts of Bangladesh. The empirical findings also showed that 47 districts out of 64 witnessed an improvement in the IFI score of financial inclusion. However, the extent of progress of financial inclusion in these 47 districts was found to be insignificant to change their status from low financial inclusion to medium or high financial inclusion. Among the socio-geographic variables, rural population, household size, and literacy rate; among the infrastructure variables, paved road networks, Internet ; and among the banking variables, deposit penetration were found to be the significant determinants of financial inclusion. One of the major contributions of this study is that it will invoke the governments and policy makers across the world to develop a financial inclusion index for their respective countries, and thereby undertake such policies to promote financial inclusion.

Financial Inclusion in United Andhra Pradesh:A Case Study of Rayala Seema Region

The paper examines financial inclusion in United Andhra Pradesh with focus on Rayala Seema region. It constructed Financial Inclusion Index (FII) using data on eight dimensions of financial inclusion for Andhra Pradesh for 2011. It observes that Hyderabad district leads with the highest FII rank, followed by Anantapur. Among the regions, Telangana leads with the highest FII rank, followed by Rayala Seema. Within Rayala Seema, Anantapur district leads with the highest FII rank, followed by Chittoor. None of the districts and regions falls under the category of high FII group. Most districts fall under the category of low FII group. Telangana and Rayala Seema fall under the category of medium financial inclusion with the FII value falls between 0.3 and 0.5. Thus, Rayala Seema has achieved less than half of the financial inclusion. The objective of financial inclusion and spreading it across areas is far ahead.

The Microfinance Industry in the Philippines: Striving for Financial Inclusion in the Midst of Growth

Several factors have contributed to the growth of the microfinance industry in the Philippines – the adoption of a sound business model – patterned after Grameen Bank – that caters to a large untapped market, assistance from government and/or donor agencies, a supportive policy and regulatory environment, and innovations based on Internet and mobile technology. However, microfinance institutions (MFIs) continue to face challenges that could affect their ability to reach more poor people even as they strive to achieve financial sustainability. To better understand the challenges faced by MFIs in meeting both their social and economic goals, we propose a research program that addresses the gaps in measuring the ‘quality’ and ‘welfare’ dimensions of financial inclusion, and that complements the development-economics literature by examining MFIs from a business-strategy perspective.

Identifying Constraints to Financial Inclusion and Their Impact on GDP and Inequality: A Structural Framework for Policy

We develop a micro-founded general equilibrium model with heterogeneous agents to identify pertinent constraints to financial inclusion. We evaluate quantitatively the policy impacts of relaxing each of these constraints separately, and in combination, on GDP and inequality. We focus on three dimensions of financial inclusion: access (determined by the size of participation costs), depth (determined by the size of collateral constraints resulting from limited commitment), and intermediation efficiency (determined by the size of interest rate spreads and default possibilities due to costly monitoring). We take the model to a firm-level data from the World Bank Enterprise Survey for six countries at varying degrees of economic development—three low-income countries (Uganda, Kenya, Mozambique), and three emerging market countries (Malaysia, the Philippines, and Egypt). The results suggest that alleviating different financial frictions have a differential impact across countries, with country-specific characteristics playing a central role in determining the linkages and tradeoffs between inclusion, GDP, inequality, and the distribution of gains and losses.

De la inclusión financiera a la intervención social: Una experiencia en el sureste de México

Uno de los factores que inciden en la persistencia de la inequidad, la perpetuación de la pobreza y el crecimiento lento de las vastas zonas—rurales y urbanas—menos desarrollados de México es la exclusión financiera. En la presente investigación se analizan diversas dimensiones de la inclusión financiera y, su impacto en zonas rurales vulnerables y de alta marginación de cuatro estados del sureste de México. Se presenta un análisis del patrón de comportamiento de una organización del sureste mexicano, como experiencia de intervención financiera, en donde la expresión central de la misma viene a ser la inclusión financiera, sustentada en una plataforma desarrollada con tecnologías de información y comunicaciones (TICs) propia. El objetivo central de este artículo es realizar un análisis sistemático de la experiencia de intervención-inclusión financiera llevada a cabo desde hace varios años en una zona marginada del sureste de México, por la organización Solución ASEA. A partir de dicho análisis se hará la propuesta de transformar la estrategia de intervención-inclusión financiera en una estrategia holística e integral: financiera, social y organizacional.

Review of Financial Inclusion Practice and its Success in India

Financial inclusion is a systematic effort to provide essential financial services to all and especially to poor people. This concept has been pushed up by government of India and RBI because even after so many years of independence high population of India remain unbanked because high population of India lives in rural area and poor people and they are not literate enough to understand the pros and cons of various essential financial services. In this paper efforts are made to review various schemes initiated by Government, RBI and others to promote financial inclusion. A model has been designed in this paper to explore various dimensions of financial inclusion. Financial inclusion has increased in overall in India but its effectiveness is still doubted.

Spatio-Temporal Dimensions of Financial Inclusion in Rural West Bengal

Spatio-Temporal Dimensions of Financial Inclusion in Rural West Bengal