Financial Inclusion Research Articles

Analysis of the Impact of Digital Inclusive Finance on the Development of Green Agriculture

Analysis of the Impact of Digital Inclusive Finance on the Development of Green Agriculture

MICROINSURANCE AS A TOOL FOR ENHANCING FINANCIAL INCLUSION IN THE INSURANCE INDUSTRY – A STUDY OF THE LIFE INSURANCE SECTOR IN INDIA

Objective: The objective of this research is to examine the role of microinsurance in promoting financial inclusion within India's life insurance sector. It aims to analyze financial inclusion indicators from 2019 to 2023 to assess the effectiveness of microinsurance in providing affordable insurance solutions to low-income groups. Additionally, the study identifies challenges such as low awareness, financial literacy, and income constraints that hinder broader adoption. Theoretical Framework: The theoretical framework is based on financial inclusion theory, highlighting microinsurance as a tool to provide affordable insurance to underserved populations. It integrates risk management theory, emphasizing insurance as a means to reduce vulnerability to financial shocks, and the diffusion of innovation theory, which explains the role of awareness and socioeconomic factors in adoption. Together, these theories link microinsurance to financial inclusion and its challenges. Method: The study employs a quantitative approach, analyzing financial inclusion indicators in India's life insurance sector from 2019 to 2023. Data is collected from government reports, industry publications, and relevant financial databases to assess microinsurance penetration and its impact. The analysis identifies trends, challenges, and opportunities for improving financial inclusion through microinsurance. Results and Discussion: The results indicate that microinsurance has significantly contributed to increasing financial inclusion by providing affordable life insurance solutions to low-income groups in India. However, the discussion highlights persistent challenges, including low awareness, limited financial literacy, and income constraints, which hinder broader adoption. Addressing these barriers through targeted education, policy interventions, and subsidies is essential to enhance microinsurance penetration further. Research Implications: The research underscores the potential of microinsurance as a vital tool for advancing financial inclusion among underserved populations. It calls for policymakers and insurers to prioritize awareness campaigns, financial literacy programs, and innovative pricing models to bridge the existing gaps in accessibility and adoption. Originality/Value: This study provides a unique contribution by focusing on the role of microinsurance in promoting financial inclusion within India's life insurance sector. It offers valuable insights into the challenges and opportunities of microinsurance adoption, emphasizing its significance as a tailored solution for low-income groups.

Influence of financial literacy, financial inclusion, and people's business credit financing (KUR) on the profitability of MSMEs among PT Pegadaian City Palembang customers

Purpose: This research is conducted to determine the effect of financial literacy, financial inclusion, and the People's Business Credit (KUR) financing on the profitability of MSMEs among customers of Pegadaian in Palembang City. Research Methodology: The sample in this study consists of 100 customers of PT Pegadaian in Palembang City, selected through purpose sampling. Data was collected using a questionnaire distributed to all customers, and the data was then processed using the Statistical Package for the Social Sciences (SPSS). Results: The research results show that financial literacy has no effect on the profitability of MSMEs, financial inclusion has a negative effect on the profitability of MSMEs, and KUR (People's Business Credit) financing has a positive effect on the profitability of MSMEs for Pegadaian customers in Palembang City. Limitations: This research is limited to analyzing the influence on MSME profitability with independent variables in the form of financial literacy, financial inclusion, and KUR financing. This research is limited to PT Pegadaian customers in Palembang City only. Contribution: This research can contribute to providing references for further research activities, especially for researchers interested in conducting more in-depth studies in this field.

Technological advancement and inclusive finance: Dual influences on environmental quality in OECD countries

Employing the Method of Moments Quantile Regression alongside fixed effects (FE) for robustness and incorporating an interaction term between technological advancement (TA) and financial inclusion (FIN), the results reveal that while TA enhances environmental quality, the FIN∗TA weakens this positive effect across quantiles. GDP and TO consistently show negative impacts on LCF. EP, however, emerges as a significant positive factor, particularly in more advanced economies. Incorporating the log(FIN2) demonstrates that financial inclusion's environmental benefits intensify in higher quantiles. Findings emphasize the importance of sustainable technological innovation, strategically integrating financial inclusion, regulating trade and economic activities, and enhancing energy productivity to achieve environmental sustainability.

KIBS Clustering, digital financial inclusion, and economic growth quality

This paper explores the effects of knowledge-intensive business services (KIBS) clustering and digital financial inclusion on economic growth quality as well as their synergistic interactions. The results indicate that KIBS clustering positively impacts growth quality but excessive clustering can lead to resource competition that hinders development. Digital financial inclusion mitigates this negative effect by improving financing access, thus enhancing KIBS clustering's positive impact. The heterogeneity analysis reveals significant differences in these effects between core and peripheral cities, with smaller cities relying more on their synergistic effects for high-quality economic development.

Financial Literacy And Inclusion Of Farmers And Fishermen: A Case Study In Tawiri Village And Dusun Seri Ambon City Island, Maluku Indonesia

Financial literacy and financial inclusion are needed to improve people's lives through Financial Services Institutions. The 2016 and 2019 National Surveys on Financial Literacy and Inclusion show that the financial literacy index of farmers and fishermen is the lowest compared to other types of work. Indonesia has considerable potential for agricultural land and marine fisheries, especially in Ambon City. This study aims to determine the effect of financial literacy on financial inclusion for farmers and fishermen. The research method is a survey of 65 households of farmers and fishermen—data analysis using SMART PLS4.0 software. The results showed that knowledge or literacy and attitudes affect skills, while skills affect access. Furthermore, access and trust affect inclusion. The implication is that improving skills and attitudes will improve access; access affects trust, which determines financial inclusion.

Barriers to women’s financial inclusion in Burkina Faso

ABSTRACT This paper investigates the barriers to women’s financial inclusion in Burkina Faso. We focus on both demand and supply side factors. Data from Findex for the years 2014, 2017 and 2021 are used. Statistical analysis show that lack of money and distance are the main barriers to women’s financial inclusion in 2014, 2017 and 2021. Interviews with women during the focus discussion groups revealed that access to formal financial products remains a difficulty for these women working in the informal sector; social pressure, particularly the behavior of husbands against the economic emancipation of women, are barriers to the financial inclusion of these women; poor information sharing and financial education are also barriers to financial inclusion for these women. To promote women’s financial inclusion, policies should focus on reducing barriers. To do this, education and access to the decent labor market are necessary to overcome the constraint of lack of money. Regarding distance, the strengthening of mobile banking must continue. To achieve women’s financial inclusion, banks need to create products tailored to women’s needs.

Unraveling the nexus: intellectual capital, Fintech innovation, competitive agility, and financial inclusion

Purpose This study empirically explores the impact of human capital, structural capital, relational capital and absorptive capacity on Fintech innovation. This study aims to investigate the potential impact of Fintech innovation on competitive agility and financial inclusion. Design/methodology/approach Data was collected from 283 participants in Jordan. Smart PLS software was used to test the hypotheses. Findings The findings reveal that human capital, structural capital, relational capital and absorptive capacity plays a significant role in Fintech innovation. Also, the outcome of path analysis confirms a significant impact of Fintech innovation on competitive agility and financial inclusion. Originality/value This study emphasizes the practical value of intellectual capital in fostering Fintech innovation for managers, banks, financial institutions and policymakers. Prioritizing investment in human, structural and social capital enhances organizational innovation.

Bridging Financial Inclusion to Water and Sanitation: Insights from Indonesia

Lack of access to improved drinking water and sanitation has been a major worldwide challenge, especially in Indonesia. This study investigates the impact of financial inclusion on access to improved drinking water and sanitation among households in Indonesia. Using binary probit regression analysis complemented with dominance analysis, we assess the relative importance of various factors, including financial inclusion, socio-economic status, and residence, in determining access to improved drinking water and sanitation services. Our findings highlight the critical role of urban residence in facilitating access to improved drinking water and sanitation, with urban areas demonstrating significantly higher access rates. Furthermore, participation in savings emerges as a more influential factor compared to credit participation, particularly in improving access to sanitation facilities. This suggests that while both savings and credit contribute to improved access, savings play a more pronounced role in addressing the higher upfront costs associated with sanitation infrastructure. Additionally, socio-economic factors such as household expenditure and education level are found to significantly influence access to improved water and sanitation, underscoring the importance of addressing broader socio-economic disparities. Overall, our study provides valuable insights and emphasizing the need for comprehensive strategies for policymakers to enhance essential access to clean water and sanitation.

Stabilizing the national banking system through digital financial inclusion, creative innovations, and green finance in low-financially developed economies

This paper investigates the effect of digital financial inclusion, creative innovations, and green finance on the stability of the national banking system in twenty-nine low-financially developed economies spanning the period 2011–2021. We demonstrate that digital financial inclusion promotion reduces banking system stability in low-financially developed economies. Additionally, creative innovations mitigate the adverse impact of digital financial inclusion on banking stability in low-financially developed economies. These findings are consistent using diverse econometric techniques. In highly developed economies, digital financial inclusion enhances national banking stability. Furthermore, green finance amplifies the positive relationship between digital financial inclusion and banking stability in high-financially developed economies. Our work sheds light on the crucial roles of digital financial inclusion, creative innovations, and green finance in the stability of national banking systems in low-financially developed economies and provides interesting comparison findings. Furthermore, this study offers recommendations for related governments and policymakers in low-financially developed economies to prioritize creative innovation to promote digital financial inclusion and stabilize the national banking system. For high-financially developed economies, encouraging green finance implementation is crucial and contributes to the banking system's stability.

Akuntansi Syariah dan Pengentasan Kemiskinan dalam Menciptakan Kesetaraan Sosial di Indonesia

Islamic accounting has developed as a financial method aimed at promoting social justice and people's well-being in addition to making profit. Islamic accounting has a strategic role in reducing poverty and creating social equality in Indonesia, which is the world's largest Muslim population. The study analyzed how the application of islamic accounting based on principles such as transparency, justice, and social responsibility could help reduce poverty rates in Indonesia. Through literature and secondary data analysis, the study found that islamic accounting, mainly by instruments such as zakat, wakaf, and qardhul hasan, could provide financial solutions that support poor people's economic empowerment. Islamic accounting not only serves as a accounting system, but also as a tool to help strengthen the redistribution of wealth and build an inclusive economy.

Does financial inclusion and financial openness matter for capital market development? Evidence from a panel ARDL-PMG approach

Purpose This study aims to examine the effect of financial inclusion (FI) and financial openness (FO) on the development of capital markets in Africa. Design/methodology/approach The study uses data from 34 countries over 18 years (2004–2021) and adopts the panel autoregressive distributed lag and pooled mean group approach, with economic growth, trade openness, government expenditure and institutional quality as control variables. Findings The analysis reveals that both FI and FO contribute to the long-term development of capital markets across all income levels within the sampled countries. The interaction between FI and FO enhances capital market development (CMD) over the long run. This finding indicates that FO particularly enhances the development of capital markets in economies with comparatively lower levels of FI. Practical implications The findings of this research underscore the importance for policymakers and professionals to adopt guidelines and regulations that promote FI and openness. Such measures can bolster the development of strong financial systems by improving access to the formal financial sector, and by contributing to the growth of capital markets. Originality/value The study is robust to the use of a multidimensional financial and CMD index. It is one of the pioneering studies that explore the relationship between FI and FO, and how this interaction influences CMD.

Driving financial inclusion: exploring mobile wallet adoption among rural Omani millennials

Purpose This study aims to investigate the adoption of mobile wallet payment services among rural Omani millennials, with a focus on social factors, perceived security, trust considerations and the moderating role of technology self-efficacy in shaping attitudes and intentions towards adoption. It also explores the role of mobile wallets in advancing financial inclusion, aligned with Sustainable Development Goal 10 (Reduced inequalities). Design/methodology/approach A survey method was used with 544 randomly selected participants from rural Oman. The study used partial least squares structural equation modelling (PLS-SEM) to analyse relationships among the constructs, including subjective norms, perceived security, trust and self-efficacy. Findings The results support five hypotheses, confirming the influence of subjective norms, perceived security and technology self-efficacy on attitudes and intentions to adopt mobile wallets. Additionally, mobile wallet self-efficacy emerges as a significant moderator, enhancing the relationship between positive attitudes and behavioural intentions. Research limitations/implications The study extends the technology acceptance model (TAM) by incorporating moderating variables such as technology self-efficacy and perceived security, offering theoretical contributions to digital payment adoption literature, especially in rural settings. Practical implications The findings underscore the need for trust-building efforts by service providers and collaborative strategies involving government incentives and promotions to foster mobile wallet adoption. Strengthening digital literacy and addressing security concerns are critical for promoting financial inclusion in rural communities. Originality/value This research contributes to promoting economic empowerment through mobile wallet adoption in rural Oman, offering valuable insights for policymakers and service providers aiming to reduce socio-economic disparities. By addressing the digital divide and supporting financial inclusion, the study supports the advancement of SDG 10 (Reduced inequalities) and fosters inclusive growth in underserved communities.

Does financial inclusion enhance farmers' resilience to climate change? Evidence from rural Ethiopia

AbstractFinancial inclusion is recognized as a vital driver of sustainable development and serves as a fundamental pillar of climate action. It is crucial to enhance the climate resilience of smallholder farmers in the face of severe and unpredictable climate shocks, which disproportionately affect them. However, the level of financial inclusion in Ethiopia remains low, and its impact on the climate resilience of smallholder farmers has not been thoroughly examined using rigorous model and comprehensive dataset. This study investigates the impact of financial inclusion on the climate resilience of rural households, using a large data set from the Ethiopian Socio‐Economic Survey. The principal component analysis was applied to construct a climate resilience index. The financial inclusion was measured using an index that encompasses three dimensions: penetration, availability, and usage. In order to address the endogenous nature of financial inclusion, an instrumental variable approach was employed, using the distance to the nearest financial institution and religion as instrumental variables. The results demonstrated a positive and significant impact of financial inclusion on the climate resilience of rural households. Therefore, the government should strengthen the provision of essential financial and related infrastructures in rural Ethiopia to improve access to financial products and services. Furthermore, it is essential for policymakers to initiate and implement financial sector reforms that ensure the availability of affordable and tailored financial services. These reforms should also prioritize the development of climate‐resilient agricultural finance, thereby contributing to the achievement of climate action goal of sustainable development.

The impact of financial literacy on access to formal financial products in Namibia

AbstractMotivationThe level of financial inclusion has increased markedly in Namibia in recent years. Currently, 78% of the population is considered to be financially included. More importantly, this increase has largely derived from vulnerable groups, including low‐income earners living in rural areas. Although there has been an increase in the rate of financial literacy, there is no formal empirical analysis showing the extent to which improved access to formal financial services is associated with financial literacy.PurposeThis article deepens the empirical analysis of financial literacy by simultaneously considering their effects on savings, bank account ownership, and access to credit and insurance in Namibia. We further disaggregated the analysis to consider heterogeneity between men and women, as well as between rural and urban populations.Approach and methodsWe used data from the Namibia Financial Inclusion Survey of 2017 and the instrumental variable probit model to minimize the bias from possible endogeneity caused by potential measurement error, unobserved variable bias, or reverse causality.FindingsThe study showed that financial literacy significantly increases the likelihood of people using formal financial products. Failure to adequately control for the associated bias would lead to substantial overestimation of the impact of financial literacy. Estimates from the disaggregated analysis showed that the impact of financial literacy differs significantly between rural and urban populations, as well as between men and women. The effects are higher for males than for females and for rural than urban sub‐samples.Policy implicationsThe positive effect of financial literacy on formal financial products suggests that policy options that promote financial literacy are crucial for improving access to formal financial products, particularly for men and the rural population. These policies could include the introduction of financial literacy programmes in schools in order to enhance personal financial knowledge and participation in the formal financial sector. Emphasis should be placed on the raising of awareness, especially among disadvantaged communities, as to the benefits of owning and operating different financial products and on the inclusion of financial literacy programmes on public television.

Access and usage of formal financial services among small-scale Cassava farmers for productivity in Enugu state, Nigeria.

Purpose: Access to financial resources has been identified as one of the ways of boosting farm output, and this can be achieved through improving access to and usage of formal financial services. The study thus evaluated the effects of financial inclusion on cassava production among small-scale farmers in Enugu state, Nigeria. Methodology: A multi-stage sampling technique was employed in the selection of 162 cassava farmers in Enugu State. The data collected were analyzed using descriptive statistics, multiple regression analysis, and Likert scale rating Technique. Finding: Empirical results showed that the average of all respondents who participated in the survey was 43 years and 62.35% of the total respondents were males. Additionally, the result showed mean household size (4.75), mean years of cassava farming experience (5.86 years), and mean farm size (0.45 hectares). The majority (88.30%) of the farmers had access to a formal financial institution and the average amount saved in the last 12 months was ₦162,154.32. The multiple regression analysis showed that socioeconomic characteristics influencing cassava output are household, farming experience, farm size, farm income, and input cost. Additionally, financial inclusion positively influenced cassava output through access to formal financial institutions and level of savings. Originality: The findings revealed the positive effect access and usage of formal financial services have on the economy. Therefore, the study recommends that farmers be encouraged to improve their usage of formal financial services such as improving their savings levels at banks and banks to reduce charges on formal financial services.

Digital financial inclusion, e-commerce development and entrepreneurial activity

While digital transformation has revolutionized financial services and commerce globally, the complex interplay between digital financial inclusion (DFI), e-commerce development, and entrepreneurial activity remains understudied, particularly in emerging economies. Prior research has largely focused on isolated effects of either digital finance or e-commerce on economic outcomes, overlooking their potential synergistic impact on new business creation. This study investigates how DFI influences entrepreneurial activity through e-commerce development in China, using panel data from 275 prefecture-level cities (2011−2021). Employing fixed-effects regression models and instrumental variable approaches, we find that DFI significantly enhances entrepreneurial activity, with stronger effects in non-central and non-provincial capital cities. The impact varies regionally: DFI's influence is most pronounced in Eastern China, where it works synergistically with human capital and trade openness, while in Central and Western regions, its effectiveness depends more on GDP and infrastructure development. Our findings demonstrate that e-commerce partially mediates DFI's impact on entrepreneurship, suggesting that digital financial services catalyze new business creation both directly and by fostering e-commerce development. These results provide novel insights for policymakers seeking to leverage digital transformation for inclusive economic growth, highlighting the importance of tailoring digital financial initiatives to regional economic contexts.

Investigating the Use of Machine Learning in Automating Credit Scoring for Microfinance

Machine learning (ML) has emerged as a transformative tool in automating credit scoring, particularly in the domain of microfinance, where access to credit often hinges on unconventional data and rapid decision-making. This research investigates the integration of ML algorithms into credit scoring models for microfinance, focusing on their ability to assess creditworthiness using diverse data sources such as transactional histories, social behavior, and mobile usage patterns. By automating the traditionally manual and subjective processes of credit evaluation, ML offers increased accuracy, scalability, and efficiency, enabling financial institutions to serve underserved populations more effectively. The study explores various ML techniques, including decision trees, random forests, and neural networks, and evaluates their performance in predicting default risk. Challenges such as data privacy, algorithmic bias, and the interpretability of ML models are also addressed. Through case studies and experimental validation, this research aims to provide actionable insights into leveraging ML for credit scoring in microfinance, highlighting its potential to improve financial inclusion and operational efficiency.

Sistema Financiero Popular y Solidario: Visión Económica y Social

Ecuador’s Popular and Solidarity Financial System (SFPS) aims to balance social and economic goals through savings and credit cooperatives. While the SFPS promotes financial inclusion and sustainability, it faces challenges in risk management and fulfilling its social mission. Supported by the 2008 Constitution, cooperatives have grown significantly but often prioritize financial stability over social objectives. Studies emphasize the need for comprehensive audits and enhanced training in managerial and technological skills. Initiatives like community tourism and solidarity circuits demonstrate the SFPS's potential to revitalize local economies, requiring state support and efficient management for sustainability. Integrating emerging technologies is crucial to improve operational efficiency and close financial inclusion gaps, especially in rural communities and marginalized groups. The SFPS must continuously innovate to remain competitive in a global and digital environment.

Internet use and household debt: insights from rural China

ABSTRACT Internet use is accelerating in rural communities of developing countries. Although much attention has been devoted to the effects of Internet use on subjective well-being, income growth, poverty reduction, digital financial inclusion, and social connections in these communities, little is known about how it affects their indebtedness. This paper bridges this gap by investigating the association between Internet use and household debt in rural China. We use a conditional mixed process model and the instrumental-variable-based causal mediation framework to analyse the 2017 China Household Finance Survey data. The results show that Internet use and household debt are positively associated: household debt is 5,370 yuan higher among Internet users than non-users. Using the Internet increases household debt through its effects on consumption and investment spending. Targeted initiatives to help rural residents gainfully utilize the Internet to improve their financial well-being should be implemented. Strengthening legislation to allow rural residents to securely and responsibly increase their investment and consumption using the Internet will enhance rural communities’ welfare as Internet access becomes widespread over the coming years.