Formal Financial Services Research Articles

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.

The importance of financial education for the effective use of formal financial services

AbstractThis paper examines global data on unbanked and underbanked consumers to highlight the role improved financial literacy and capability could play in motivating and enabling the safe and beneficial use of financial services. The paper uses Global Findex data, a demand-side survey on ownership and use of accounts at formal financial institutions, such as a bank or similar financial institution, or a mobile money service provider. The paper reviews the self-reported barriers to account ownership and use cited by unbanked adults and identifies the challenges faced by account owners who could not use an account without help. Together, these issues point to the importance of financial education to improve digital and financial literacy skills, in addition to product design that considers customer abilities, and strong consumer safeguards to ensure that customers benefit from financial access.

Modified CPT-TODIM method for evaluating the development level of digital inclusive finance under probabilistic hesitant fuzzy environment.

Unlike traditional finance, digital inclusive finance is committed to integrating digital technology with the financial industry to bring groups originally excluded from traditional finance back into formal financial services and provide financial services at reasonable prices and matching needs for all social classes. Digital inclusive finance can effectively reduce the financing costs of SMEs, improve the external financing environment of enterprises, and provide more convenient, equal and perfect financial services for enterprises by using technical support such as "big data + artificial intelligence". The development level of digital inclusive finance is a classical multiple attributes group decision making (MAGDM). The Probabilistic hesitant fuzzy sets (PHFSs), which utilize the possible values and its possible membership degrees to depict decision-makers' behavior in different conditions, has been paid great attention. Though numerous methods have been applied in this environment since PHFSs has been introduced, there are still new fields to be explored. In this paper, we introduce the Cumulative Prospect Theory TODIM (CPT-TODIM) for probabilistic hesitant fuzzy MAGDM(PHF-MAGDM). Meanwhile, the information of entropy is utilized to calculate the weight of attributes, which is used to improve the classical TODIM method. At last, we utilize a numerical case for evaluating the development level of digital inclusive finance to compare the extended CPT-TODIM method with the classical TODIM method.

The Impact of Financial Inclusion on Economic Development

The importance of an inclusive financial system is considered a priority all over the world. The importance of financial inclusion raised from the problem of financial exclusion were most of the Middle east and North Africa (MENA) region countries didn’t have enough formal financial services and most of the population didn’t have access to formal bank accounts. Financial inclusion not only helps individuals and families, but collectively it develops entire communities and can help drive economic development. The purpose of this study is to assess the effects of financial inclusion on economic development in the MENA region. The aim of this study is to investigate the impact of financial inclusion on the economic development of MENA region countries. To achieve this aim, a three-dimension Financial Inclusion Index (FII) was created using Principal Component Analysis (PCA) to measure each country’s level of financial inclusion. These dimensions are access, usage, and quality of financial services. Data was collected from 18 MENA region countries using a sample period from 2004-2019. Based on a 2-step Generalized Method of Moments (GMM) system, the results showed that an increase in the level of financial inclusion leads to the increase of MENA region countries’ economic development.

The impact of access to financial services on mitigating COVID-19 mortality globally.

The COVID-19 pandemic has disproportionately affected different social and demographic groups, deepening the negative health implications of social and economic inequalities and highlighting the importance of social determinants of health. Despite a deep literature on pandemic-related disparities, specifically regarding social determinants and health outcomes, the influence of the accessibility of financial services on health outcomes during COVID-19 remains largely unexplored. Modeling (pre-omicron) COVID-19 mortality across 142 nations, we assess the impact of national-level usage and access to formal financial services. Two financial access indexes constructed through principal component analysis capture (1) usage of and access to formal financial tools and (2) reliance on alternative and informal financial tools. On average, nations with higher pre-pandemic use of and access to formal financial services had substantially lower population mortality risk from COVID-19, controlling for key population health, demographic, and socioeconomic covariates. The scale of effect is similar in magnitude-but opposite in direction-to major risk factors identified in previous literature, such as lung cancer, hypertension, and income inequality. Findings suggest that financial services deserve greater attention both in the public health literature related to COVID-19 and more broadly in policy discussions about fostering better public health overall.

Financial inclusion matter for poverty, income inequality and financial stability in developing countries: new evidence from public good theory

PurposeThis paper aims to examine the influence of financial inclusion (FI) on poverty, income inequality and financial stability from the perspective of public good (PG) theory in developing countries.Design/methodology/approachThis study applies the fixed effects model (FEM), pooled ordinary least square (OLS) regression and generalized method of moment (GMM) across panal data of 69 developing countries from 2002 to 2020 inclusive.FindingsMultiple regression analyses show that FI reduces poverty and income inequality while improving financial stability. Secondary enrolment ratio, GDP per capita, and trade openness reduce poverty and income inequality. However, a higher inflation rate increases poverty and income inequality while reducing financial stability. Finally, age dependency ratio and population do not affect poverty, income inequality or financial stability.Research limitations/implicationsThe regulators and policymakers in developing countries should raise the level of formal FI by expanding the size of the formal financial sector and improving the access of the large unbanked population to financial products/services. Improving FI enables the unbanked population to take over productive activities and ease consumption, which in turn complementing economic growth.Social implicationsThe increase in FI enables the developing countries to include the financially excluded population through formal financial products and services, which improve financial stability and eradicate poverty and income inequality in society. Thus, the FI enhances the social welfare of society.Originality/valueThis is the first study that examines the impact of FI poverty, income inequality and financial stability in the context of developing countries. This study contributes to the theoretical implications of the PG theory by examining the influence of FI on poverty, income inequality and financial stability in the context of developing countries.

Exploring the Tenure - Democracy Nexus on Customary Land Right Holders

In Zimbabwe, as in many African countries, land remains a basic strategic asset for those who live in the rural areas. Particularly, for those people in customary tenured areas, access to land is negotiated through identity. Most Zimbabweans either live or have land rights in customary tenure areas. Here, land is not a commodity that can be traded nor is it regarded as an individual asset. Disputes related to access, ownership and use of customary tenure land are handled in traditional courts presided over by chiefs and their subordinate structures. Those who dwell in customary tenure areas have no direct relationship with civil courts, where private property disputes are resolved, but instead, must go through the traditional courts. In one of my earlier publications, I have argued that the involvement of traditional courts in customary land tenure issues is the hallmark of classical citizenship. While I continue to proffer this argument in the current study, the study also illustrates how traditional authority has, over the years become an appendage of the state through strategic measures which include salaries for chiefs, vehicles, rural electrification, and power that comes with being entrusted with the role of distributing subsidies. Additionally, the exclusion of customary tenure areas from formal financial services means that households are at the mercy of government led subsidies which are steeped within the political interests of the ruling party ZANU-PF. In many cases, government subsidies end up being used as incentive to support the incumbent party. In such instances, elected officeholders take the lead in the distribution of these subsidies. The relationship between land tenure and democracy is perhaps the most compelling for reforms, but rarely discussed. In this study I expand on my previous interventions by arguing that the ways in which land is held in customary tenure areas and the existing subsidy regimes have played a critical role in restricting rural residents’ autonomy to make autonomous political choices. I further argue that the autonomy to choose is mostly compromised in contexts where access to productive resources such as land, markets, mechanical, financial, and physical capital are negotiated through subservience to traditional authorities who are politically affiliated.

Maize Productivity and Household Welfare Impacts of Mobile Money Usage in Tanzania

This study examined the determinants and impacts of mobile money (MM) usage on maize productivity and poverty likelihood (i.e., the probability of a household falling below the international poverty line at USD 1.9 per capita per day) in the Mbeya Region, Tanzania. The analysis was conducted using the endogenous switching regression (ESR) model on data from a random sample of 1310 households selected from seven districts in the region. Results of the ESR estimation show that MM usage is strongly and positively associated with the education level of the household head, asset ownership, credit access, input access, and social networks. MM usage is also significantly associated with increased maize productivity and a reduced poverty likelihood. Farmers who chose to use MM services increased their maize productivity by about 124 kg/acre and reduced their poverty likelihood by nearly 25 percentage points, as measured by the progress out of poverty index. These findings call for a targeted approach to reaching and supporting MM usage among households with constrained access to formal financial services to increase maize productivity and reduce poverty likelihood.

The Impact of Digital Financial Inclusion and Bank Competition on Bank Stability in Sub-Saharan Africa

The last few years have witnessed a rapid development in digital finance that may threaten the manner in which traditional financial services are being used. It opens up new opportunities for low-income groups and small businesses that have limited or no access to formal financial services. Thus, digital financial inclusion plays a vital role in boosting a country’s financial inclusion, fulfilling some sustainable development goals and achieving higher economic growth. This study builds on a new measure of digital financial inclusion to examine the impact of digital financial inclusion and bank competition on bank stability in Sub-Saharan Africa for the period 2014 to 2020 using the two-step System Generalised Method of Moments. An index of digital financial inclusion, z-score, Herfindahl–Hirschman Index (HHI), and non-performing loans were used as data variables. The study findings reveal that digital financial inclusion has a significant positive relationship with bank stability (z-score) and a negative relationship with non-performing loans. The study also found a significant negative effect of bank competition (HHI) on bank stability in line with the competition-fragility view. Policymakers should ensure digital financial literacy for all since it feeds into bank stability and also reduces bank insolvency. They should also find ways of enhancing bank competition which reduces non-performing loans and bank insolvency. On practical implications, the study calls for strategic measures to preserve bank stability, such as complementing digital financial inclusion with financial literacy and enhancing bank competition.

Financial inclusion demand-side determinants: analysis from Egypt

PurposeMost research studies have examined financial inclusion from a supply-side perspective, which measures access and usage of formal financial services by banking outreach indicators, the number of borrowers and the availability of other financial services in a given area. However, this approach is often insufficient to nuance the degree of financial exclusion faced by segments of the population. This study's overall objective is to empirically examine demand-side determinants of financial inclusion.Design/methodology/approachThis research examines the impact of these variables on the level to which an individual is financially included. Notably, the metric employed goes beyond the basic ownership of a bank account and measures the usage of financial services rather than just access. Quantitative data were collected through self-administered surveys targeting 456 individuals in Egypt in order to test the proposed hypotheses. Three different econometric models were tested using regression analysis.FindingsThe findings imply an insignificant relationship between financial literacy and financial inclusion. Results suggest that financial exclusion is associated with low trust in financial institutions, low-income level, low education level and being elderly, with a more substantial influence on income and education.Originality/valueEgypt suffers from a lack of up-to-date demand-side data and data available at hand allow us to know very little about the factors underpinning financial inclusion. This study is contributing demand-side, up-to-date primary data, that provides multiple insights for Egypt regarding the subject, which helps provide answers and suggestions to policy implications.

ЦИФРОВА ФІНАНСОВА ІНКЛЮЗІЯ ДЛЯ ПРИСКОРЕННЯ ДОСЯГНЕННЯ ЦІЛЕЙ СТАЛОГО РОЗВИТКУ

The content, direction, and main components of digital financial inclusion are determined to accelerate the achievement of the Sustainable Development Goals in the conditions of the post-war recovery of Ukraine. Based on the use of the World Bank database, which contains the results of representative surveys at the level of household finances, a quantitative assessment of the level of digital financial inclusion in the main directions of basic financial services of adults in Ukraine compared to other world countries was carried out. According to the results of the research, the authors justify the conclusion that the digital financial infrastructure and the level of digital financial services in Ukraine remain relatively low compared to European countries and middle-income economies. It has been identified the reasons for the "financial exclusion" of the population of Ukraine from the system of formal financial services. It was concluded that the transition to the "cashless economy" model in Ukraine is slowing down due to barriers. The main barriers limiting the access of the population of Ukraine to formal financial services are underdevelopment of the financial infrastructure, forced exclusion of a part of the population from financial services, not enough money of a large number of consumers, lack of trust in financial institutions, high level of the shadow economy in Ukraine and others. The results of the study contain recommendations to overcome existing barriers to expand the population's digital access to basic financial services in Ukraine. The issue of recognizing free access to the Internet as a fundamental right of every person – a digital right – has been updated.

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.

An Analysis of the Impact of Digital Financial Inclusion on Financial Stability

Over the last few years the world at large have witnessed a rapid development in digital finance providing a promise to accelerate financial and economic inclusion. This has led to an inclusive growth focused on financial inclusion as a policy issue. Digital financial services have allowed governments to disburse funds to those in need quickly and have opened up new opportunities to many households and firms that had limited or no access to formal financial services. The major objective of the study was to examine the impact of digital financial inclusion on financial sector stability. The study adopted a quantitative research design and used two-step Generalized Method of Moments for dynamic panel data to explore such a relationship in twelve selected banking institutions for the period 2013 to 2023. An index of digital financial inclusion, z-score, real GDP, loans to asset ratio as well as inflation were used as data variables. The results of this study suggest that digital financial inclusion has a significant positive relationship with bank stability (z-score). Economic growth has a marginal positive effect with bank stability. In order to achieve sustainable digital financial inclusion, the study calls for policymakers to ensure digital financial literacy for all since it feeds into bank stability and also reduces bank insolvency. They should also find ways of enhancing depositor confidence and trust in the banking industry.

Impacto empírico do acesso a serviços financeiros na renda dos agricultores em Gana

ABSTRACT: The impact of access to financial services (AFS) and access to informal financial services (AIFS) on farmer income is examined in this study. After a multi-stage random sampling procedure, the study used a sample size of 478 people from two regions in Ghana. The endogenous treatment regression (ETR) model was used to account for selection bias while the unconditional quantile regression (UQR) model was used for a heterogenous analysis. The findings showed that education, financial literacy, IT access, farm size, and distance were all factors of access to financial services. Similarly, the findings revealed a positive and statistically significant link between household income and access to formal financial services. Similarly, there was a positive and significant association between access to informal financial services and household income. The findings showed that access to formal and informal financial services has different effects on household income. As a result, the effects of access to financial services on income varied by quantile. Based on the findings of the study, we developed policies to boost financial services accessibility as a means of increasing household income.

Determinant Factors of Financial Inclusion

Financial inclusion is a process of involving people who do not have access to formal financial services. When a country is financially inclusive, economic activity in a country can depend on banking transactions and have greater financial sustainability and more effective monetary policy. The main objective of this research is to identify the factors that determine the level of financial inclusion in Indonesia and to suggest policy measures to increase the level of inclusion. This research uses the method Generalized Method of Moments (GMM) on 14 sharia banks full-fledge and Islamic bank units in Indonesia in the period 2010 to 2019. The results of this study found that bank size and deposit rates had a positive effect on the level of financial inclusion. Empirical findings also show that inflation has a negative and significant effect on financial inclusion.

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.

Effects of Microfinance Services on Economic Status Improvement: A Case of SKBBL, Pokhara, Nepal

Background: Microfinance is an effective tool for financial inclusion and poverty reduction in developing countries like Nepal. It delivers financial and non-financial services to unbanked people from formal financial services. Microfinance services support people from weaker sections of society with a view of socio-economic transformation. Low access to finance is a problem for poor and marginalized people. Microfinance institutions provide microcredit to unbanked people without physical collateral. Thus they help people from lower-income groups improve their livelihood through productive investment.
 Objectives: This paper aims to examine the effects of microfinance services on the economic status of clients' status with references to Sana Kisan Bikas Laghubitta Bittiya Sanstha Limited (SKBBL), Pokhara, Nepal.
 Methods: The research presents the findings of data collected through a survey research design in the Kaski district of Nepal. The researchers administered the survey questionnaire to 235 clients of SKBBL microfinance institutions involved in the programme for the last five or more years. We used a stratified random sampling technique to collect the data. The sample population comprised 70 from a scheduled caste (Dalit), 75 from ethnic groups, and 90 from upper castes. Both descriptive and inferential statistics have been used to analyze the data. The paired sample t-test has been used to examine the effects of microfinance intervention on occupational status, income level, consumption expenditure, capital expenditure, and monthly savings of the clients.
 Results: The results show that microfinance has contributed a significant role. It has enabled people from lower income groups to access microcredit and encourage productive investment that facilitates productive investment and economic transformation. -The result derived from paired sample t-test finds the positive effects of microfinance intervention on occupational status, income level, consumption, capital expenditure, and saving habits.
 Conclusion: This study concludes that role of microcredit is significant in enhancing the clients' economic status. Microfinance positively affects clients' earnings, savings, spending, asset accumulation, and occupational status. However, utilizing microcredit in productive sectors is necessary to empower the clients' economic status. The findings indicate that microfinance institutions must focus on effective microcredit applications to help create micro-businesses and improve the clients' livelihood status.

Factors affecting e-payment acceptance by customers: an empirical study in the Kingdom of Bahrain

PurposeConsumers frequently use electronic payments (e-payment) as their first step into formal financial services. The advancement of information and communication technology, on the other hand, has resulted in several achievements for human civilization, altering people’s lives, behaviors and societal measures. This study’s main aim is to investigate issues and identify the factors that are likely to influence customers’ acceptance of implementing e-payment in the Kingdom of Bahrain.Design/methodology/approachA quantitative research approach was adopted to test the influence of e-payment data security, trust, ease of use, usefulness and accessibility on customers’ acceptance of the service. A questionnaire survey was electronically administered to a purposive sample, and 531 responses were returned, achieving the required sample size for the study. Descriptive statistics analysis was used to ascertain data validity and consistency, and regression analysis was used to test the model’s hypotheses.FindingsThe findings of this study demonstrated a high influence of the mentioned factors on the e-payment acceptance of the customers in the Kingdom of Bahrain. The main recommendations are to increase the adoption of e-payment; focus highly on the security factor in e-payment adoption; create a trustworthy e-payment service; strive to make the e-payment services more user-friendly; increase the longevity of the e-payment services by focusing on usefulness; and make e-payment services more accessible.Originality/valueThis study’s potential contribution is to identify the factors that influence e-payment acceptance by customers in Bahrain and draw attention to issues to be considered in adopting new e-payment services.

CBDC, Fintech and cryptocurrency for financial inclusion and financial stability

PurposeThe purpose of this study is to discuss the role of central bank digital currency (CBDC), Fintech and cryptocurrency for financial inclusion and financial stability.Design/methodology/approachThis study used critical discourse analysis to identify the benefits and risks of CBDC, Fintech and cryptocurrency for financial inclusion and financial stability.FindingsFintech, CBDC and cryptocurrency can increase financial inclusion by providing an alternative channel through which unbanked adults can access formal financial services. CBDC and Fintech services have the potential to preserve financial stability, while cryptocurrency presents financial stability risks that can be mitigated through effective regulation. This paper also identified some problems of CBDC, Fintech and cryptocurrency for financial inclusion and financial stability. This paper offered some insight about the future of financial inclusion and the future of financial stability.Practical implicationsAlthough CBDC, Fintech or cryptocurrency can extend financial services to unbanked adults and offer cost-efficient advantages, there are risk considerations that need to be taken into account when using CBDC, Fintech and cryptocurrency to increase financial inclusion and to preserve financial stability.Originality/valueThe literature has not identified the combined role of CBDC, Fintech and cryptocurrency for financial inclusion and financial stability. To the best of the author’s knowledge, this paper is the first paper to assess the combined role of CBDC, Fintech and cryptocurrency for financial inclusion and financial stability.

Financial service access and agriculture commercialization of smallholder rice growers in Kilombero District

The study was conducted in Tanzania to assess the effect of financial service access on the agricultural commercialization of smallholder rice growers in Kilombero under the moderating effect of institutional cultural cognition. Primary data were collected from 397 smallholder farmers, and after data cleaning, we remained with 358 responses subjected to regression analysis. Data were analyzed using hierarchical multiple regression analysis with the help of IBM SPSS software. The findings revealed that financial service access significantly positively affected commercialization. Also, the results confirm that institutional cultural cognition has a significant negative moderation effect on the relationship between financial inclusion and agriculture commercialization. The results suggest that reducing cultural cognition can increase financial service access. So, if the wrong perception and beliefs of the poor and marginalized society toward formal financial services can be reduced, then access to formal financial services will be increased, thus improving the level of agriculture commercialization. Also, we recommend that policymakers and the government set policies to reduce the cost of accessing financial services and enhance financial services availability.