Financial Inclusion In India Research Articles

Exploring the Gender Dimension in Financial Inclusion in India: Insights from the Global Findex Database

Despite great progress in recent years in improving access to formal financial services in developing countries, there is still significant access and usage disparity between men and women. We use individual-level data from the World Bank’s Global Findex 2017 database to investigate the differences in the use of accounts by men and women who are account holders and who save and borrow money formally to provide a comprehensive picture of individuals’ financial behaviour in India. Employing treatment effects estimations through the use of propensity scores, we find that although there is improvement in saving behaviour, borrowing behaviour as well as financial resilience among men and women who save and borrow formally as compared to those who do not, women lag significantly behind men in terms of the same. Thus, expanding women’s access to economic opportunity is critical to achieving gender equality in financial inclusion and unlocking the potential for economic empowerment and development. Our findings can aid in the formulation of policies that consider the unique requirements of women in order to increase financial inclusion and close the gender gap in India.

Measurement of Financial Inclusion in India: An Integrated Approach with TOPSIS and EWM

The extent of financial inclusion among Indian states for the period has been measured and compared by constructing a composite index using an integrated methodology of TOPSIS (Technique of order preference by similarity to ideal solution) with EWM (Entropy Weighting Method). The proposed index has three broad dimensions of banking penetration, availability, and usage of banking services with an extended variable. Data for the study include: state wide bank data, demographic, geographic, and economic data, and are taken from Reserve Bank of India’s (RBI) publications. There is a general improvement in financial inclusion in India, while UT of Chandigarh and Delhi top the index, and Manipur and Nagaland bottom of the index. The southern region tops India on financial inclusion in terms of average rank. The methodology adopted in this study is not widely adopted in IFI literature. Moreover, the index has been constructed with statically assigned weight by using EWM.

Revisiting Financial Inclusion with Human Development in India

There have been several interventions by the government to promote financial inclusion in India. This article attempts to measure financial inclusion in India during 2001–2019, segregating states/union territories and using three dimensions: availability, access and usage of banking services. The index value of each dimension is calculated with the help of the method ‘Max–Min procedure to convert indicators into indices’, and overall index value of financial inclusion is obtained by taking the geometric mean of the three index values of the three dimensions. A fluctuating trend of financial inclusion reflects a less satisfactory performance. Financial inclusion is also evaluated following the CRISIL’s (Credit Rating Information Services of India Limited) criteria of measurement. The lack of a modernised financial system and financial illiteracy of the vulnerable groups, especially in remote areas, often holds back the mission to run efficiently. Finally, the nexus between financial inclusion, human development and the growth and development of India is studied with the expectation that people’s empowerment might help the mission to be successful. The states and regions that need attention are identified and required improvements in banking services are examined through an environmental analysis based on the existing system.

Progress and Prospects of Financial inclusion in India

Progress and Prospects of Financial inclusion in India

Language Barriers as a Limitation to Achieving Financial Inclusion Through FinTech in India

Government policies have been imposed in recent years to create an interconnected financial system to increase financial inclusion in India, using financial technology (FinTech) as a crucial tool in achieving these goals. While partial progress has been made with increased availability of basic financial services, India still has hundreds of millions unbanked – the question as to why has yet to be answered. With over 120 local languages in India, communication barriers that have been shown to have detrimental effects in other industries could exist in financial industries as well; many don’t speak the major languages FinTech is typically developed in and can be excluded from economic participation. Below are results of my survey conducted among Indian financial executives to determine the prevalence of language barriers in FinTech in India, the harmful effects of these language barriers, and potential solutions to the issue. A survey method and data analysis of the responses were performed. It was determined that language barriers prevail in India and adversely impacts the effectiveness of FinTech in increasing financial inclusion, with 87.5% of respondents agreeing that language barriers do limit its benefits. Furthermore, the results indicated a majority of respondents proposed new translation or voice-recognition features as the primary tool for closing language gaps. My findings indicate that the variety of local languages in India do inhibit use of FinTech, and a potential solution that would allow hundreds of millions more to participate in the economy would revolve around voice-recognition services to bridge these barriers.

Ranking of countries based on multi‐dimensional financial inclusion index: A global perspective

AbstractThis article has proposed a new five‐dimensional financial inclusion index (FII) incorporating important indicators of digital financial services and insurance services to evaluate the scenario of financial inclusion across 136 countries for the year 2017. Here, dimensions have been created depending upon the characteristics of variables. To carry out the analysis, we have used the two‐stage principal component method. First, all five dimension indices (geographic outreach, demographic outreach, access, usage population, and usage volume) have been constructed, and then finally, the composite FII has been computed. One important addition in building this index is the inclusion of insurance‐related and digital finance‐related variables, which have not been included in previous cross‐country studies. Another contribution of this study is the identification of the dimension(s) that ultimately have the greatest influence on the financial inclusion score. We discovered that dimensions (access and usage population) constructed based on demand‐side factors dominate the level of financial inclusion. Therefore, top‐ranking countries in the access and usage population index are more likely to score higher than others in the FII. This underlines the relevance of demand‐side factors as indicators of financial inclusion over supply‐side factors.

A STUDY ON FINANCIAL INCLUSION THROUGH “PRADHAN MANTRI JAN DHAN YOJANA” IN INDIA

This paper aims to study the necessity of financial inclusion in India with reference to Pradhan Mantri jan Dhan Yojana.The sustainable growth of a developing coutry like India is only possible through the financial inclusion as providing financial services to all the people.Pradhan Mantri Jan Dhan Yojana is an ambitious scheme for the biggest financial inclusion in the world.This scheme was announced by the Hon’ble Prime Minister Narendra Modi on 15th August 2014 and it was launced on 28th August 2014.On the inaugural day, 1.5 crore new accounts were opened.This effort will lead a sustainable economic growth and also help in eradicate poverty. Financial inclusion is a creative idea which encourages the banking tradition and plays an important role to reduce poverty. PMJDY is based on the principle of “Sab Ka Sath , Sab Ka Vikas” ie provide financial services to those people who excluded from financial access.This initiative provides services like banking facility, credit, remittiances , affordable of this scheme is to provide zero balance account to the people ie there is no prerequisite to maintain any minimum balance in PMJDY accounts. KEYWORDS: Financial inclusion, Sustainable growth, Developing countries, Pradhan Mantri Jan Dhan Yojana, Financial access.

Does financial inclusion reduce income inequality? Empirical evidence from Asian economies

PurposeThe present study examines the significance of financial inclusion in reducing income inequality in the Asian context.Design/methodology/approachThis study uses panel estimation techniques such as the Pedroni cointegration test, Kao residual-based test, FMOLS, ARDL and Granger causality, a dataset consisting of the Gini coefficient index, three dimensions of financial inclusion measures and one added variable on financial depth, spanning from 2005 to 2019.FindingsThe study finds that in the long-run, income inequality disparity is highly influenced by financial inclusion indicators, such as the number of bank branches, deposit accounts, outstanding loans and domestic credit to the private sector. Whereas in the short run, disparities in income are unaffected by all the indicators of financial inclusion. Further, unidirectional causality from financial inclusion indicators to income inequality necessitates the need for policymakers to design policies and programs that would enhance access to financial services as an essential mechanism to reduce income disparity.Originality/valueStudies based on a panel of Asian countries that have undergone impressive growth of financial inclusion initiatives since the past decade—but are still facing widening income inequality—are conspicuously rare in the literature. The empirical analysis fills this void by showing the significant role financial inclusion indicators play in steering the Asian economies toward income equality throughout the study period.

IMPACT OF COVID-19 PANDEMIC ON FINTECH AND FINANCIAL INCLUSION IN INDIA

The study seeks to investigate how the pandemic of Covid-19 has impacted customer engagement in using Fintech services and resultantly the status of financial inclusion in India. This study is empirical and analytical in nature. Digital payment is taken as a proxy of FinTech. The data is collected from primary and secondary sources. To understand what persuades a customer to use FinTech services, the response to a survey questionnaire has been obtained from 310 respondents through e-mail and hand collection. Factor analysis is used to investigate the factors that impacted customer engagement in digital payment, before and after the Covid-19 pandemic. The factors used in this model are access, usage, technology, and financial literacy. Results show that there is a significant positive relationship between all the factors and the use of FinTech services. There is a significant positive relationship between FinTech and financial inclusion, as already established by the previous studies. The findings of this review are pivotal as they can serve as useful input for the ongoing debate directed towards increased use of FinTech in achieving greater financial inclusion. The findings suggest that by advancing the technology and increasing financial literacy, access, and use of FinTech services can be increased which in turn will increase financial inclusion in developing countries.

ANALISIS PENGARUH INKLUSI KEUANGAN MELALUI LAYANAN FINTECH P2P LENDING TERHADAP HUMAN DEVELOPMENT INDEX INDONESIA

Financial inclusion is closely related to a system that ensures the accessibility, availability and use of the formal financial system for all economic actors. Through the use of fintech, it can accelerate the expansion of public access to financial services so as to increase financial inclusion. Increasing financial inclusion is expected to have an effect on increasing the Human Development Index. This study aims to determine how the effect of financial inclusion through fintech services specifically for p2p lending services on the Human Development Index in Indonesia, using access indicators, availability indicators, and usability indicators as the independent variable and the Human Development Index as the dependent variable. This research is a type of quantitative research using multiple linear regression analysis that uses secondary data, in the form of statistical report data on Indonesian fintech and the human development index starting from January 2019 to December 2021. The results of the analysis show that partially the indicators of access, availability and usability have an effect on significant to the Human Development Index in Indonesia. Simultaneously, all indicators of financial inclusion through fintech p2p lending services have a significant effect on the Human Development Index in Indonesia.

The Relationship between Financial Inclusion and Sudanese Economic Growth 2006-2020

The paper shed light on the causal relationship between financial inclusion, and economic growth in Sudan from 2006 to 2020. The paper seeks to answer the following question: What is the impact of financial inclusion indicators on economic growth in Sudan? Therefore, In order to answer this question, the paper aimed to find out the causal relationship between some indicators of financial inclusion including (the number of ATMs, the number of Sudanese bank branches and the ease of doing business index) in addition to the growth of the Sudanese economy proxies by RGDP to test the causal relationship between the variables of the study, the paper employed the Vector Auto regression Model (VAR) methodology and also adopted the Angel Granger Causality Test through which the outputs of the Eviews10 showed that the number of bank branches and the ease of doing business index affect the growth of the Sudanese economy, and also showed that there is a relationship between the number of ATMs and economic growth, and accordingly the paper recommended the provision of banking services represented in facilitating the requirements for opening bank accounts as well as facilitating services for obtaining business licenses, in addition to the delivery of banking services to all regions of Sudan. Keywords: Financial Inclusion, VAR Model, Economic Growth

An Analytical Study of Development of Financial Inclusion Indicators in Some Countries of the Maghreb and the Arab Gulf during the Period (2004-2020)

This study aims to analyse the development of indicators of financial inclusion in a group of Gulf and Maghreb countries during the period from 2004-2020, as the goal behind this analysis is to investigate the reality of financial inclusion in the economies of Arab countries and also to highlight the most important challenges hindering the promotion of financial inclusion at the level of these Arab countries.. Besides, the study concluded that the rates of financial inclusion recorded within the partial indicators in the Arab Gulfcountries are relatively high and acceptable to the same extent, and some of the rates recorded even in some developed countries are commercial, this is in contrast to the rates recorded in the Arab Maghreb countries, including Algeria.

Financial Inclusion in India: A Regional and District Level Analysis

Financial Inclusion aims at including all sections of society into the ambit of basic banking services. Since 2005, RBI has made several efforts to enhance financial inclusion across India. The study has analyzed the progress of various parameters of financial inclusion in all six regions of India from 2000 to 2018. The research also attempts to analyze the degree of relationship between financial inclusion and social development variables in India with the help of multiple regression models and Dummy variables. The result of the research unveils that literacy rate and urbanization are significant factors whereas the population is found to be an insignificant factor in determining the level of financial inclusion. The study concludes that the south region leads in all the parameters of financial inclusion in all the years and the northeast region remain on the lowest scale.

Financial depth and its impact on financial inclusion by applying to Iraq and Egypt

The research aims to analyze the indicators of financial depth and financial inclusion in the Arab countries represented in (Iraq and Egypt) and to measure the correlation between the research variables using the program (Eviews V.10), as well as using the multiple linear regression model for the period (2004-2019), To measure the impact of financial depth on financial inclusion in the Arab countries, the research sample. The research concluded that there is a significant impact of financial depth on financial inclusion in (Iraq and Egypt), and that financial depth has a significant role in achieving the objectives of financial inclusion in the Arab countries, the research sample. This entails the need to encourage competition between financial institutions and diversify financial services at low cost and high quality to attract the largest possible number of customers and encourage individuals to save and invest in the best way through preparing programs directed to various segments of society to enhance the culture of saving and investment, and developing the infrastructure of the banking sector and markets Capital, which contributes to the greater financial depth and financial inclusion.

The impact of financial inclusion on digital payment solution uptake within the Gulf Cooperation Council Economies

Recognizing the role of society in the sustainability of payment system innovation through the quadruple helix framework, this study analyzes the causal influence of demand-side financial inclusion indicators on society's uptake of digital payment solutions (DPS) within the regional economy of the Gulf Cooperation Council. To this end, the present study relies on data extracted from Global Findex surveys (in 2014 and 2017), as well as the economic theory of random utility maximization, to model individuals' DPS uptake decisions “ceteris paribus.” The maximum likelihood estimation revealed no gender-based gradient in DPS uptake behaviors; additionally, financial inclusion indicators such as transaction account ownership and debit card ownership did not significantly influence endogenous or exogenous DPS uptake decisions between 2013 and 2017. However, all remaining financial inclusion indicators did significantly influence DPS uptake. Assessing these findings through the lens of open innovation and the ongoing efforts from the Arab Regional Payment System project, which seeks to expand financial inclusion by facilitating access to transaction accounts, there is reasonable evidence to suggest that complementary financial inclusion policies addressing the use dimension of DPS (i.e., extending access to saving and borrowing, along with digital payroll practices for both private and public enterprises) would contribute to more effective policy on financial inclusion in the region.

Financial access and household’s borrowing: Policy perspectives of an emerging economy

This paper analyzes access to finance based on the usage of financial services by Indian households. Based on two rounds of nationally representative All India Debt and Investment Survey (AIDIS) for 2002 and 2012, we examine how access to credit is associated with a household's socioeconomic and demographic characteristics using Heckman’s two-step approach procedure. Our results show that belonging to higher asset quintile groups has a statistically significant positive effect on the household's decision to take loans only from the formal sector in both rounds and significant negative effects on taking a loan only from the informal sector. Similarly, social and religious groups play a significant role in the decision of the household to take a loan. Households with more educated adults are more likely to take a loan. Households involved in regular wage-earning occupations in urban areas are more likely to take a loan from formal sources. Thus, the importance of policy placing greater emphasis on demand-side barriers rather than on improving the physical availability of formal financial services to promote financial inclusion in India.

FINANCIAL DEVELOPMENT, FINANCIAL INCLUSION AND INFORMALITY: NEW INTERNATIONAL EVIDENCE

This paper explores the empirical relationship between informality and several indicators of financial development (FD) and financial inclusion (FI). We exploit a panel of 152 countries with annual information between 1991 and 2017. Using panel cointegration techniques, we find evidence of a negative long-run relationship between informality and FD/FI for different groups of countries. Moreover, exogeneity tests indicate that some FD/FI indicators cause less informality. Specifically, we find that in developing countries FD reduces informality when measured as “financial credit” and “bank credit”, whereas FI reduces informality when measured as “number of bank accounts”. These results suggest that higher credit and more bank accounts have contributed to reducing informality in developing countries in the long run. Additionally, we find evidence of double causality between informality and other FD/FI indicators in developing and Latin American countries.

The Relationship between Financial Inclusion and Women's Empowerment: Evidence from Iraq

The study aimed to test the relationship between financial inclusion and women's empowerment in Iraq to determine whether financial inclusion promotes women's empowerment under the pretext that if we can empower women, this will have a positive impact on the sustainable development process in the country. The study adopted the descriptive analysis approach to test the variables of the study, namely, financial inclusion (owning an account, owning a bank card, saving with an official financial institution, borrowing from an official institution, borrowing from family or friends, receiving salaries from the public sector, and receiving salaries from the private sector) as an independent variable and its relationship to economic empowerment expressed in the percentage of women's participation in the labor market as a dependent variable. The secondary data of the study was collected based on the Global Findex database issued by the World Bank. The study period included four periods for 10 years (2011 - 2021) based on the survey periods issued by the World Bank every three years. Based on the descriptive analysis, the study found that the percentage of women's participation in the labor market in Iraq is very weak in the public and private sectors and that the utilization of financial inclusion programs promotes women's empowerment economically. Thus, the results proved the validity of the study hypothesis that there is a strong relationship between indicators of financial inclusion and the empowerment of women in Iraq. The study recommended the decision-makers should review fiscal policies associated with financial inclusion programs to be more suitable for women by expanding digital financial services to link women, especially female entrepreneurs, to markets, increasing income, reducing poverty, facilitating women's control largely over their profits and savings, and all the critical elements of women's economic empowerment.

The Nexus between Financial Inclusion and Monetary Policy: The Case Study of Selected ASEAN Countries

This study examines the relationship between financial inclusion and monetary policy in nine selected ASEAN (Association of Southeast Asian Nations) countries during 2010-2019. To answer the objective of this study, the Vector Error Correction Model (VECM) is used to analyze the effect of financial inclusion on inflation as a proxy of monetary policy effectiveness. In addition, the causality between financial inclusion and monetary policy is also examined in this study. The data used are panels data and collected through secondary sources. The multidimensional approach of IFI (index of financial inclusion) is constructed to represent a comprehensive financial inclusion measurement. The results showed that financial inclusion had a negative effect on inflation in the long-term and short-term; it indicates that an increase in financial inclusion will lower inflation which eventually increases the effectiveness of monetary policy in Indonesia, Malaysia, Thailand, Philippines, Singapore, Vietnam, Cambodia, Myanmar, and Laos. Moreover, a causality exists between financial inclusion indicators and monetary policy in selected ASEAN countries. This study concludes that financial inclusion through access and usage of financial services improves the efficiency of monetary policy in nine selected ASEAN countries in controlling inflation. This study suggests that monetary authorities must emphasize the link between financial inclusion and monetary policy objectives. Advanced financial inclusion can help policymakers formulate and implement monetary policies contributing to economic stability and sustainable growth.

The Impact of Financial Technology onPromoting the Financial Inclusion of Banks in Arab Countries

Thisresearch highlightsthe importance of financial technology (FinTech) in banking by providingfinancial and banking services; it also tries to show the impact of such FinTech in promoting financial inclusion to deliver all financial products to a wide segment of customers of different ages and for both sexes, especially the poor. Hence, FinTech worksto improve peoplestandard of living by giving them credit at low costs as well as involving all sectors, including small and medium enterprises, with indicators of access to financing. Furthermore, whether FinTech is provided by non-financial companies, individuals or financial and banking institutions, it provides the necessary and rapid financing at the lowest profits. Lately, anemergency financing is introduced, which contributes to supporting sustainable development opportunities.This study applied the descriptive and analytical approach. It relied on revising Arabic and foreign sources and electronic websites related to the topic under study. The experience of the Arab countries has been provided to understand the obstacles they faced and how to overcome them and the opportunities that appeared in front of them.The researcher got some conclusions and recommendations that the purpose of financial inclusion is to integrate the financial excluded individuals in the official financial system. The study reported that among the difficulties faced by FinTech is the weak financial culture of the public. However, this did not stand as an obstacle; the Arab world witnessed a great development in the field of FinTech. Yet, some Arab countries had the lionshare, such as the United Arab Emirates. The use of FinTech in the Arab countries faces a number of challenges, including legal, regulatory and financing related to capital.FinTech usingthe mobile subscribers index plays an effective role in achieving financial inclusion, through the indicators of FinTech and financial inclusion.Most Arab countries still score the lowest levels for the financial inclusion index, due to the lack of interest or development of FinTech, which negatively affects the rise in the financial inclusion index