Level Of Financial Inclusion Research Articles

The appropriate level of financial inclusion: The perspective of financial stability

The appropriate level of financial inclusion: The perspective of financial stability

The determinants of financial inclusion from the households' perspectives in Vietnam.

Various studies have been conducted to measure financial inclusion at the country level. However, measuring financial inclusion at the household level has largely been neglected in the existing literature, particularly for emerging markets such as Vietnam. This study constructs an index of financial inclusion at the household level using the Vietnam Household Living Standard Surveys (VHLSS) in 2014, 2016, and 2018. We also identify the determinants of financial inclusion from the perspective of Vietnamese households. Our study also utilizes an ordered logit model to examine the effects of the determinants on each level of financial inclusion. Our empirical results reveal three key determinants, including (i) total income per household, (ii) relative income representing the difference between the average income of the province that the household currently lives in and the total income of this household, and (iii) the distance from the household to the nearest bank branch, are crucial factors driving the financial inclusion. While the total income per household positively enhances financial inclusion, relative income appears to reduce the degree of financial inclusion. Besides, distance to the nearest bank branch poses another challenge in achieving the financial inclusion goals in Vietnam in the future.

FINANCIAL INCLUSION FOR SELECTED OECD COUNTRIES

Purpose- Financial inclusion is defined as a process that ensures the ease of access, availability, and usage of the formal financial system for all members of an economy by emphasizing the use of accessibility and availability of financial services. A financial sector is measured and compared on four main features; debt is the size of financial institutions, access is the access and use of financial services by the users, efficiency is the efficiency in the provision of financial services, and stability is the stability in the provision of financial services. Financial inclusion, in short, is adults' access to and use of financial services. This study aims to measure the financial inclusion level for selected OECD countries from 2010-2021. Also, this study aims to estimate the effect of financial inclusion on economic growth and income inequality for selected countries. Methodology- The data used in this study cover a range of variables related to financial inclusion from various institutions, including the IMF-Financial Access Survey (IMF-FAS), the World Bank - World Development Indicators (WB-WDI), the World Bank - Global Financial Development Database (WB-GFDD) and the Standardized World Income Inequality Database (SWIID). These variables provide insights into the dimensions and determinants of financial inclusion and their impact on economic and social outcomes for selected OECD countries. In the study, we run panel data regressions for each group separately, using GDP per capita as the dependent variable to determine the impact of the Financial Inclusion Index on economic growth. We also construct two different models for each group of countries with and without the added control variables into the models. Findings- The analysis reveals that the effect of financial inclusion on economic growth is negative for all groups of countries. The impact is significant for Group 1 and Group 2. The magnitude of coefficients changes when we add control variables to the model. However, it does not change the significance level of the coefficients. The magnitude of the coefficients increases as countries’ per capita income increases. At the same time, the effect of financial inclusion on the GINI index is significant only in the model for Group 3 with control variables. The sign of the impact is negative. It implies that the GINI index decreases as the financial inclusion index increases. So, the effect of financial inclusion on income inequality is positive for countries in Group 3. Conclusion- The empirical results did not support the relationship between financial inclusion and economic growth (GDP per capita). These results may be explained by advocating the financial sector's quick and fundamental digital transformation. Hence, the rules for availability, accessibility, and usage of financial products and system are completely changed in the past ten years. On the other hand, the relationship between financial inclusion and income inequality, measured by GINI Index, is consistent with the literature only for Group 3 countries (developing countries). The increase in the gap between rich-developed and developing countries may explain these results. An increase in financial inclusion still supports adjustments in income inequality in developing countries, but its effect is disappeared in developed countries in the last 12 years. Keywords: Financial inclusion, economic growth, OECD countries, financial indicators, income inequity. JEL Codes: G20, G21, G23

Financial Literacy and Assistance in Compiling Independent Financial Reports Using Expense IQ Money Manager

Indonesia has a financial literacy rate far below average when compared to other countries that are members of ASEAN countries. Likewise, Thailand has a financial literacy score of 27 which is lower than the regional average, although the level of financial inclusion is quite high. The priority targets for financial literacy in 2023 will be allocated to the community, one of which is for students. Especially for students, knowledge of financial literacy will be built through the role of teachers as educators. Before being able to disseminate, of course, teachers need to first improve their understanding regarding their financial literacy. This can also be useful for teachers personally in managing their finances. The main problems of Eakapapsasnawich Islamic School Thailand School Teachers lie in the low level of financial literacy so they tend to make wrong decisions, lack of awareness in understanding the importance of recording their personal finances, and the absence of socialization about the use of financial software or financial recording applications in managing finances well, inspiring the Team to educate Eakapapsasnawich Islamic School Thailand School Teachers related to financial literacy and assistance in preparing independent financial statements using Expense IQ Money Manager. The method used is the provision of material through lectures, motivation, discussion, and practice / mentoring. The output target of this program is scientific articles published through service journals indexed by Sinta, and increasing teachers' financial literacy in using digital-based financial recording applications.

Financial inclusion as an indicator of national security

The prerequisites for forming national security based on the creation and use of financial inclusion are studied. The essence of the concept of financial inclusion as a component of national security is defined. The expediency of its implementation for all segments of the population is substantiated. It is emphasized that financial inclusion is one of the five directions of the Strategy for the Development of the Financial Sector of Ukraine until 2025 and has specific strategic goals and performance indicators that are related to the level of public confidence in the financial system, the level of financial literacy of the population, and is reflected through the ratio of non-cash card transactions (including P2P) to the total number of transactions and the ratio of cash to GDP. An analysis of the indicators of the level of financial inclusion, which forms the basis of the Strategy for the Development of Ukraine's Financial Sector until 2025, shows that the current values of the indicators do not correspond to their target values. The carried-out analysis made proposing options for developing financial inclusion possible, considering its strategic vectors. In dynamics, the level of public awareness of the use of financial products in Ukraine and other countries worldwide is analyzed. A forecast of the use of financial products by number and type for 2023 – 2024 is made. Positive changes in awareness of financial products in Ukraine have been noted. The expediency and necessity of applying financial inclusion to ensure national security are substantiated. It is noted that the issue of financial inclusion has become especially relevant in the context of the Russian-Ukrainian war. The Top 4 financial products in terms of recognition in the context of age groups are analyzed, and the difference by age categories is reflected. The methods of applying financial inclusion are allocated, and the main aspects that affect it are identified. The main aspects of the information platform on the National Bank of Ukraine website, which is the formation and development of financial literacy among all strata and age categories, are studied. It is noted that financial literacy measures, which the National Bank of Ukraine initiated, require the support of partners. Keywords: financial inclusion, financial service, financial product, financial literacy, protection of user rights, National Bank of Ukraine.

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

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

Gender disparity and Digital Financial inclusion in Advancing the Attainment of Sustainable Development Goals in Developing Countries

Purpose: Digital financial services delivered through fintech have grown substantially in developing countries to address the issues of access, affordability, and usage that cripple financial inclusion in these countries. Despite the growth of digital financial services researchers continue to lament the problem of financial inclusion for women. Researchers continue to allude to most women being digitally financially excluded in developing countries. Through a systematic literature review, this study sought to establish the challenges explaining the digital financial exclusion of women or the continued low levels of financial inclusion in developing countries. In addition, the paper sought to unpack how the digital financial inclusion or exclusion of women could impact the realization of the United Nations 2030 Sustainable Development Goals. Methodology: The paper adopted a systematic review approach. Literature on the subject was gathered from Scopus indexed journals, reviewed and synthesized Findings: The research established that factors such as digital, social, and financial inclusion, taxation of DFS, socioeconomic and sociocultural challenges as well literacy challenges, and regulatory and legal factors were responsible for the financial and digital financial exclusion of women, thus expanding the gender gap. Digital financial inclusion was found to be critical for economic development and the fruition of SDGs because women spend more on family, and development and generally save better than men. Originality/Value: Digital financial inclusion and financial inclusion are very fundamental to sustainable development and the accomplishment of the SDGs globally and more so in developing countries. Developing countries face an array of challenges toward achieving sustainable development and economic growth. These challenges include poverty and extreme poverty, corruption, resources shortages, lower levels of development, unemployment, and inequality as well as the financial exclusion of vulnerable groups of the population. While several studies have explored challenges of financial inclusion in developing countries, there is a dearth in literature that explores the intersection between digital financial inclusion or exclusion of women in developing countries and the realization of the SDGs. This paper sought to address this void by imploring the intersection between gender disparity and digital financial inclusion as these concern the realization of SDGs in developing economies.

India's Financial Shape-up: PM Jan Dhan Yojana - Critical Review

The 'Pradhan Mantri Jan Dhan Yojana' (PMJDY), introduced in August 2014, stands as a flagship initiative by the Indian Government to promote financial inclusion. This paper undertakes a critical examination of the impact and effectiveness of PMJDY in shaping India's financial landscape over time. The program's primary goal was to extend financial services, including banking and insurance, to the sections of India's population that were either unbanked or underbanked. It aimed to foster financial empowerment, mitigate economic disparities, and encourage a transition towards a cashless economy. This critical analysis employs a multi-faceted approach to assess PMJDY. Firstly, it evaluates the level of financial inclusion achieved through the program, scrutinizing metrics such as the number of accounts opened, the reach of banking services in both rural and urban areas, and the accessibility of banking facilities. Secondly, the paper examines PMJDY's effectiveness in enhancing financial literacy and awareness among its beneficiaries. Thirdly, it delves into the program's impact on reducing leakages in social welfare schemes by implementing direct benefit transfers. Fourthly, it explores the role of technology and digitization in extending the program's coverage and improving its efficiency. Moreover, this review addresses the challenges and constraints faced by PMJDY, encompassing issues related to financial sustainability, dormant accounts, and service quality. It also contemplates the broader implications of the program concerning its contribution to economic growth, poverty alleviation, and the overall financial well-being of the nation. In conclusion, this critical assessment offers insights into both the strengths and weaknesses of PMJDY while presenting recommendations for further enhancements and policy adjustments. It sheds light on the program's role in shaping India's financial landscape, its influence on financial inclusion, and its potential to reshape the nation's economic prospects. Ultimately, this analysis seeks to contribute to well-informed discussions regarding the future of financial inclusion in India and the significance of PMJDY as a pivotal driver in reshaping the country's financial landscape.

The relationship between payment inclusion and the demand for cash

The aim of the article is to identify the existence of a relationship between payment inclusion and the demand for cash and the impact of the behavioural factor, which is the uncertainty associated with a natural disaster (pandemic) on various streams of demand for cash. The authors formulated the following research hypotheses H1: Macroeconomic determinants in the form of the cost of money (represented by the interest rate) significantly affect the transaction demand for cash despite the increase in non-cash transactions with the use of funds in bank accounts. H2: Uncertainty as a behavioural factor affects the size of the demand for money, although this impact is more significant in the case of a demand of a precautionary nature than of a transaction nature. H3: The level of financial inclusion measured by the dissemination of non-cash transactions has a significant and negative impact on the transaction demand for cash. In order to verify them, the authors built a linear regression model. The obtained results of the study allowed to confirm the impact of uncertainty on the demand for cash. However, the impact of payment inclusion on the demand for cash was not confirmed in the study.

Trust in banks, financial inclusion and the mediating role of borrower discouragement

The link between bank trust and financial inclusion remains less explored despite the recent emphasis on financial inclusion in the midst of significant declines in bank trust across the globe. From an emerging country perspective, we examine the bank trust – financial inclusion nexus and the mediating role of borrower discouragement, using data extracted from a comprehensive individual/household level survey in Ghana. After addressing endogeneity, we find that, overall, financial inclusion among those who have trust in banks is 34.3 percentage points higher, compared to those with no trust. This finding is consistent across three different methods of addressing endogeneity. Higher levels of financial inclusion associated with bank trust are more evident among males and urban-located residents. Further analysis revealed that the link between bank trust and financial inclusion is mediated by the discouraged borrower syndrome. It is recommended that financial institutions make conscious efforts to foster client trust which has the capability to reduce borrower discouragement and improve financial inclusion.

Financial Inclusion and Sustainable Growth in North African Firms: A Dynamic-Panel-Threshold Approach

This paper investigates the impact of financial inclusion on sustainable firm growth in Northern African countries (Egypt, Morocco, and Tunisia) during the period of 2007–2020. To this end, this study employs a dynamic panel threshold regression (DPTR) model. This model is a panel-data model that can capture different behaviors of data, depending on a threshold variable. The main results showed the existence of a threshold effect. This means that when financial inclusion is low (high), sustainable firm growth is limited (significant) due to the absence (presence) of appropriate financing, information, and financial tools. However, the levels of financial inclusion in North African countries are insufficient and require improvement. Therefore, it is essential for policymakers and managers to continue to promote the quality of financial inclusion by improving access to financial services and the regulatory environment to facilitate firms’ access to financing and support their sustainability.

A Post-COVID State Level Study of Financial Inclusion in India in 2022

Academicians and policymakers alike are becoming increasingly curious about the scope and significance of financial inclusion because of its ramifications for growth, poverty eradication, equality and the sustainable development goals. The present study is an attempt to know about the status and disparities in financial inclusion at the state and regional levels in India post-COVID in the year 2022. On the basis of the index of financial inclusion at the state level, the union territory of Chandigarh stood first, Goa second and Delhi third, with high levels of financial inclusion. On the other hand, Nagaland, Bihar and U.P. stood last with the 34th, 35th and 36th positions. Andhra Pradesh with an IFI of 0.220 and Mizoram with IFI of 0.206 stood in the middle in the 18th and 19th positions. Twenty eight states are low financial inclusion states which implies that India has miles to go to achieve the goal of financial inclusion.

Entrepreneurial Risk and Digital Financial Inclusion: A Cross‐Country Analysis

The inception of financial technologies (Fintech) has enabled expanded use of financial services. Fintech contributes to financial inclusion and by doing so provides impacts on income inequality, poverty and economic growth. A prospective route of influence exerted by Fintech is to assist economic agents in taking entrepreneurial risks. The purpose of this study was to investigate the impact of digital financial inclusion, as enhanced by FinTech, on entrepreneurial risk. An index for measuring levels of digital financial inclusion was constructed based on variation patterns in several indicators of digital activities. A cross‐country model was proposed that relates entrepreneurial risk to digital financial inclusion as well as to a variety of other economic and social factors. Estimation results based on a panel of countries show that digital financial inclusion (0.265), institutional quality (0.169), per capita GDP (0.0456) and education (0.0475) have positive and significant effects on entrepreneurial risk. In contrast, time required to start a business (−0.136) and effective tax rates on capital (−0.494) provide negative and significant effects. In addition, a significant quadratic relationship between entrepreneurial risk and remittances (employee compensation and personal transfers) was found.

Impact of Financial Literacy, Cognitive Abilities and Demographics Characteristics on Financial Inclusion

This study aims to assess the relationship between cognitive ability, financial literacy, and financial inclusion of women in Gwadar. A cross-sectional research design was employed, with quantitative data collected through questionnaires. A total of 306 samples were analyzed using partial least squares structural equation modeling (PLS-SEM). The findings reveal that cognitive ability and financial literacy significantly impact women's level of financial inclusion. Moreover, both cognitive ability and financial literacy directly influence financial inclusion, considering control variables and demographics. This study highlights the importance of enhancing cognitive ability and financial literacy among women for supporting financial inclusion. Policymakers, financial institution managers, and advocates of financial inclusion can benefit from understanding these relationships. To promote financial literacy effectively, advocates should assess the cognitive abilities of communities and incorporate them into the development of interventions. This research contributes to the literature on financial inclusion by examining the relationship between cognitive ability, financial literacy, and financial inclusion among rural women in Gwadar, offering valuable insights in the context of a developing country.

AN EMPIRICAL EXAMINATION OF THE RELATIONSHIP BETWEEN GLOBAL FINANCIAL INCLUSION & ECONOMIC GROWTH

The academics, policymakers and regulators have shown significant interest in the study of financial inclusion. Financial inclusion has theoretically demonstrated a favourable impact on economic growth, but its empirical findings seem to be rare. The goal of this article is to provide a thorough understanding of the relationship between financial inclusion and economic growth. The degree of financial inclusion on a global scale has been quantified with the help of four multi-dimensional global indexes, emphasizing the role played by the banking sector, insurance sector, and other deposit-taking corporations as well as their overall contribution to enhance the level of financial inclusion. Afterward, panel econometric techniques were used to study the relationship. The study uses annual data of 37 countries for the years 2010 to 2020. The results support favourable long-run relationship between the selected variables

Estimation of Financial Inclusion Index for Low and Lower-Middle-Income Countries

This study aims to estimate the financial inclusion (FI) index in Low- Income and Lower-Middle- Income (LLMI) Countries. The study used the Principal Component Analysis technique and Euclidean Distance Method to estimate the FI index for 39 LLMI countries over 11 years, from 2010 to 2020. For constructing the index, this study used four dimensions, i.e., “financial access, financial usage, infrastructure & communication technology, and banking cost.” These findings suggest that the exploitation of FI is the reason behind the low FI level in LLMI countries. Moreover, these countries have a higher banking costs compared to high-income countries. Therefore, financial inconsistency and banking competition hinder achieving an ideal FI level. This study also discusses policy recommendations for optimal FI in LLMI countries. From a policy perspective, strong regulation for FI is necessary for countries with unstable economic conditions, such as Ghana, which has an unsuitable economic condition to enhance FI. To increase the level of FI, the government must develop a strategic framework to improve FI. FI policy must focus on initiating, monitoring, and developing FI in the country.

Socio-economic determinants of financial inclusion in Central and Eastern Europe during the COVID-19 pandemic

A society’s financial inclusion – understood as possessing and actively using a bank or non-bank account – is one of many indicators of sustainable growth and economic development. The COVID-19 pandemic has accelerated the process of financial integration through the use of modern technologies in finance, financial innovation and the need to have an account to receive aid from government crisis shields or to confirm official activities through a trusted profile in a bank. Furthermore, EU regulations have accelerated the process of financial integration through the institution of a basic bank account and open banking solutions. Financial education programs and activities of financial institutions under the Corporate Social Responsibility (CSR)/Environment Social Governance (ESG) strategy have also contributed to improving financial literacy, which directly reduces financial self-exclusion. The aim of the article is to check whether financial inclusion has increased during the pandemic and to identify socio-demographic determinants of this inclusion such as sex, age, in or out labor force, education, and wealth level in selected CEE countries. The article uses statistical data from The Global Findex research conducted since 2011 and by the World Bank, covering the period 2011-2021. The empirical study confirmed that during the COVID-19 pandemic, the largest increases in the percentage of people aged 15+ with a bank account were recorded, and the studied Central and Eastern European countries differed in this respect. Selectedsocio-demographic variables differentiated the level of financial integration in the analysed countries. The level of financial inclusion in selected European countries increased in the considered period, especially in countries with the initially lowest level of financial inclusion (Ukraine, Bulgaria). Financial inclusion was positively influenced by professional activity, at least secondary education, age of 25 and above, and high income. The greatest degree of financial inclusion was differentiated by education, and then by professional activity. However, sex was not shown to differentiate the level of financial inclusion.

Analisis Kebijakan Laku Pandai Terhadap Pengembangan Ekonomi Lokal di Sumatera Barat

The Laku Pandai policy that has been issued by the Government is expected to increase the level of financial inclusion and literacy in Indonesia. However, not many realize that the Laku Pandai policy also has a further impact on local economic development in the region. Therefore, this study aims to analyze Laku Pandai's policy on local economic development in West Sumatra. This study was designed using a qualitative method with a descriptive approach. The source of the data used is from interviews with Laku Pandai agents, in this case BRILink agents in Padang City and Solok Regency as representatives of urban, sub-urban and rural areas in West Sumatra. The results show that the Laku Pandai policy issued by the government has an influence on local economic development, especially in West Sumatra. This can be seen from the important role of local economic development that can be seen after the implementation of the BRIlink Agent began in 2016. Important roles that can be seen and felt such as increasing business opportunities, employment, business retention, economic diversification, self-sufficiency, increasing the tax base from the world business and society, quality of life, recognition of local products, and increased competitiveness. All of these important roles are certainly not only felt by BRILink agents, but also by all parties and layers in the area where the agent is located.

Impact of Monetary Policy on Financial Inclusion in Emerging Markets

The study investigates the impact of monetary policy on the level of financial inclusion in the big-five emerging market countries from 2004 to 2020. Several indicators of financial inclusion and the central bank interest rate were used in the analysis. It was found that the monetary policy rate has a mixed effect on financial inclusion, and the effect depends on the dimension of financial inclusion examined. Specifically, a high monetary policy rate has a significant negative impact on financial inclusion through a reduction in the number of depositors in commercial banks. A high monetary policy rate also has a significant positive impact on financial inclusion through greater bank branch expansion. The policy implication is that both contractionary and expansionary monetary policies lead to positive improvements in specific indicators of financial inclusion, because increase in interest rate leads to bank branch expansion which is beneficial for financial inclusion and decrease in interest rate leads to increase in the number of depositors in commercial banks which is also beneficial for financial inclusion. It was also found that the rising monetary policy rate has a negative effect on all indicators of financial inclusion in the post-financial crisis period. Overall, the effect of monetary policy on financial inclusion seem to depend on the monetary policy tool used by the monetary authority and the dimension of financial inclusion examined. The monetary authorities should pay attention to how their monetary policy choices might affect the level of financial inclusion and reduce the benefits that society gains from financial inclusion.

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

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