Financial Inclusion Measures Research Articles

Unveiling the mask of Financial Exclusion: A Micro-Level Analysis of Gaddis and Gujjars Tribal Communities Financial Inclusiveness.

Financial exclusion is a pervasive issue that affects millions of individuals worldwide, hindering their economic growth and development. Despite efforts to promote financial inclusion, many individuals remain excluded from formal financial services, perpetuating a cycle of poverty and inequality. This study seeks to unveil the mask of financial exclusion by examining the micro-level factors that influence individual financial inclusiveness. Using a mixed-methods approach, analyze data from a survey of 382 non nomadic tribal community individuals in a developing country, supplemented by in-depth interviews with 90 nomadic tribal respondents. The results of this study reveal that financial exclusion is a complex phenomenon driven by a range of factors, including socioeconomic characteristics, financial literacy, and access to financial infrastructure. This study also find that existing measures of financial inclusion, such as account ownership and credit access, mask the true extent of financial exclusion, as many individuals with formal financial accounts still face significant barriers to using these services. This study contributes to the literature on financial inclusion by providing a nuanced understanding of the micro-level factors that shape individual financial inclusiveness. This research argue that policymakers must move beyond aggregate measures of financial inclusion and instead focus on addressing the specific needs and challenges faced by excluded individuals. By doing so, policymaker can create more effective policies to promote financial inclusion and reduce poverty and inequality

The impact of financial inclusion on rural–urban households welfare inequality in Ghana: A decomposition analysis

AbstractThis article examined the impact of financial inclusion on rural–urban households' welfare inequality in Ghana using nationally representative survey data sourced from the seventh round of the Ghana Living Standard Survey. The article used a multidimensional financial exclusion index and the real per adult equivalent measures of total annual household consumption expenditure as measures of financial inclusion and welfare, respectively. The article employed the instrumental variable estimation technique to account for the issues of endogeneity and sample selectivity bias associated with measuring financial inclusion. The estimated results from recentered influenced function‐Ordinary Least Squares of the unconditional quantile regression and the Oaxaca‐Blinder techniques show significant rural–urban welfare gaps in favor of urban households at the mean and across the selected quantiles. The study also found that differences in financial inclusion between rural and urban households contribute significantly to the welfare gaps, while the economic returns to financial inclusion reduce the welfare gaps both at the mean and the selected quantiles. The study recommends that policies aimed at improving financial inclusion as well as strengthening financial institutions in rural areas be put in place to help reduce the rural–urban welfare inequality in Ghana.

Sustainable development goals: Attaining sustainable living through financial inclusion in Sub-Saharan Africa

This study examines the effect of financial inclusion on sustainable living in 20 sub-Saharan African countries using the panel Autoregressive Distributive Lag (ARDL) model. The findings indicate that FII, the numbers of borrowers, depositors, bank branches and automated teller machines exert a significant effect on GDP per capita in sub-Saharan Africa. The Pooled Mean Group (PMG) estimates further indicate that FII (which captured the combined effect of financial access and usage) exerts a negative effect on gross domestic product (GDP) per capita in sub-Saharan Africa (SSA). However, the results of the individual measures of financial inclusion, that is, the numbers of borrowers, depositors and banking penetration exert a positive effect on gross domestic product (GDP) per capita in the long run in sub-Saharan Africa. This portends that financial inclusion is a significant contributor that can improve sustainable living conditions in sub-Saharan Africa. Based on these, the study recommends the need to improve access to and usage of financial products and services through user-friendly and service-fluent financial technologies in sub-Saharan Africa. This will help increase the number of households, smallholder farmers and businesses to access the formal financial system to meet their reoccurring and precautionary funding needs in sub-Saharan African countries.

Financial Inclusion And Financial Well-Being Of Ambulant Vendors In Kapalong, Davao Del Norte

The study explores the level of financial inclusion and financial well-being of ambulant vendors in Kapalong, Davao del Norte. This study utilized the descriptive-correlation design utilizing the adaptive questionnaire, which was validated by the panel of experts in both independent and dependent variables. Statistical tools used in the study were mean and Pearson-r for the treatment of the data collected and gathered. Eighty-eight respondents from 14 barangays in Kapalong were selected using random sampling. The results revealed that the five indicators of financial inclusion: financial literacy, accessibility, availability, affordability, and usage were rated high. It also revealed that the mean of the indicators from financial well-being got a high descriptive level, which includes financial preparedness, beliefs of credit limits, and risky indebtedness behavior. The result showed that there is a significant relationship between financial inclusion and the financial well-being of ambulant vendors in Kapalong, Davao del Norte. This concludes that all measures of financial inclusion used in this study have a high relationship with financial well-being. Therefore, the two variables were highly significant to each other. Keywords: financial inclusion, financial well-being, descriptive-correlation design, ambulant vendors, Kapalong, Davao del Norte

Impact of COVID-19 Movement Restrictions on Mobile Financing Services (MFSs) in Bangladesh

According to the National Financial Inclusion Strategy (NFIS), Bangladesh aims to achieve a 100% financial inclusion target by 2026 through mobile financing services (MFSs). However, despite several efforts, the financial inclusion score remained only 53% at the end of 2021, compared to 50% in 2017. A substantial proportion of this growth came through MFSs during the COVID-19 pandemic. This article investigates the short-run and long-run influence of COVID-19 movement restriction orders on MFSs. An autoregressive distributed lag model (ARDL) is applied to the monthly transaction data over the period of December 2016 to May 2022 of the three most popular MFSs. Movement restriction orders are associated with a significant increase in person-to-person transactions (P2P) and person-to-business transactions (P2B) in the long run, but the effect is positive and statistically insignificant for remittance transfer. Furthermore, using the volume of ATM transactions as a measure of financial inclusion, this study confirms the crucial role of movement restriction orders in intensifying the financial inclusion of Bangladesh through MFSs. The coefficients of error correction models (ECM) indicate that policymakers must act promptly to develop actionable strategies to maintain the short run momentum of the demand for MFSs to achieve the national target.

Financial inclusion's impact on energy poverty: Evidence from Indonesia

This study tests the association between financial inclusion and energy poverty in Indonesia. It adopts multi-dimensional energy poverty and financial inclusion measures employing the 2018 Statistics Indonesia data. The energy poverty measures cover six indicators, i.e., the primary cooking fuel, indoor air pollution, lighting, ownership of household appliances, and supporting essential services such as education, entertainment, and communication. On the other hand, the financial inclusion variable involves household access to banks, credit, and insurance. In testing the financial inclusion-energy poverty association, the present study performs the Two-Stage Least Square (2SLS) method, involving household distance to the nearest financial facilities as an instrument variable (IV) to overcome the potential endogeneity problem from the reverse causality between the financial inclusion and energy poverty. This analysis reports a robust negative and significant association between financial inclusion and energy poverty, bringing potential critical notes for Indonesia's policy formulation against energy poverty.

What happened in COVID to conflict: Re-examination of financial inclusion and green development nexus in China natural resource sector

This study aims to provide insights into the effects of COVID-19 pandemic on the intersection of financial inclusion and green development in the natural resource sector. Specifically, this study explores the dynamic relationship between financial inclusion, green development in the natural resource sector, with a focus on China. Using cross-sectional data from 3 natural resource exploitation industries in China, we employ a panel cointegration approach to analyze the relationship between financial inclusion and green development. The dataset covers the pre-COVID and COVID-19 periods, allowing us to examine the impact of the pandemic on this nexus. Our findings shed light on the role of financial inclusion in promoting sustainable practices within the natural resource sector during times of crisis. We observe that during the COVID-19 pandemic, there has been a heightened focus on the interplay between financial inclusion and green development. This is particularly evident in the context of China's natural resource exploitation industries, where initiatives to enhance financial inclusion have been instrumental in driving sustainable practices and mitigating the adverse environmental impacts of resource extraction. Furthermore, our research underscores the importance of aligning financial inclusion strategies with broader environmental objectives, especially in light of the upcoming Conference of the Parties (COP27) and its focus on global climate action. By leveraging financial inclusion measures to facilitate the adoption of green technologies and practices, the natural resource sector can make significant progress towards sustainable development. This study contributes to the existing literature by offering empirical evidence of the linkages between financial inclusion, green development, and the natural resource sector in the context of China. Our findings provide valuable insights for policymakers, industry practitioners, and stakeholders seeking to enhance sustainability and promote inclusive growth within the natural resource sector.

Financial inclusion, vulnerability coping strategies and multidimensional poverty: Does conceptualisation of financial inclusion matter?

AbstractPolicy emphasis on financial inclusion and deepening has shifted away from measures capturing formal financial services only and towards the development of more inclusive financial markets which account for both formal and informal services. This study examines the effect of financial inclusion and vulnerability coping strategies on multidimensional poverty, where the conceptualisation of financial inclusion is based on four perspectives—(i) one that focuses on only the formal financial sector, (ii) another that concentrates on only the informal financial sector, (iii) one that considers only the mobile money sector and (iv) finally, one that combines all financial markets (i.e., formal and informal including mobile money). Findings show that the conceptualisation of financial inclusion does not only matter in identifying the financially included but also has an implication on how financial inclusion influences multidimensional poverty. Financial inclusion measures that use only formal financial products and services understate their potential effects on multidimensional poverty, thus, justifying the need for a financial inclusion measure that considers both formal and informal sectors. Incorporating informal financial products and services in the measure reduces multidimensional poverty more for female‐headed households and those in rural settings. Households' adoption of vulnerability coping strategies has the potential to reduce the likelihood of being multidimensionally poor.

The Determinants of Financial Inclusion in Vietnam: A Demand-Side Approach

While a large body of studies has captured macro financial inclusion on the supply side, this research paper contributes significantly to the literature on determining financial inclusion in Vietnam from the demand side. The primary target of this paper is to measure an overall financial inclusion index by employing micro data of 1,002 respondents in Vietnam from the World Bank. Additionally, based on the calculation of financial inclusion index, we investigate the determinants of financial inclusion and examine the barriers to financial inclusion in Vietnam. The ordinary least squares regression analysis and logit regression are employed to estimate the effect of demographic characteristics and the barriers to financial inclusion. The main findings reveal that people who are female, wealthier, more educated, or in the workforce exhibit a higher financial inclusion index. Besides, the financial inclusion level of high-income people is not affected by working status, while this level of middle and low-income people does. Women are also less likely to be financially included because they complain that financial institutions are too far away or because another family member has an account. Older people are more concerned about lack of documentation, lack of trust, and demand reasons. To achieve the purposes of robustness, the measurement of financial inclusion was changed following previous studies to confirm robust and stable baseline results. Accordingly, these findings contribute to issuing adequate policies that break the barriers to financial inclusion and enhance financial inclusion, especially for less educated, poor, out of the workforce, and old people.

Financial exclusion, depopulation, and ageing: An analysis based on panel data

This paper focuses on the relationship between rural depopulation and territorial financial exclusion. We provide a replicable statistical methodology to identify the existing patterns at municipal level based on the degree of financial exclusion caused by the absence (named as Type I financial exclusion) or paucity (named as Type II financial exclusion) of bank branches. Firstly, the extent to which the sociodemographic characteristics of a municipality influence its degree and type of financial exclusion is analyzed by using panel data regression models. Secondly, by means of cluster analysis techniques, a typology of municipalities is provided that takes into account their sociodemographic characteristics as well as their availability of bank branches. Within this context, this paper explores the case of Aragón (Spain), a European region with significant depopulation and over-ageing problems. Our results show a lack of homogeneity across Aragonese municipalities, both in the processes of depopulation and financial exclusion. This heterogeneity has led us to propose financial inclusion measures tailored to the population size as well as the degree of ageing, the employment possibilities, and labor dynamism of each group of municipalities. In other words, this paper reveals the need to propose measures that accommodate each territory's peculiarities, which could contribute to the achievement of sustainable territorial development in Aragón.

Does financial inclusion stimulate India's economy: A panel data analysis

The study empirically examines the connections between three different measures of financial inclusion with output growth across the states of India. Applying the panel co‐integration and error correction model for 26 states and 4 union territories, it concludes that all three measures of financial development with gross fixed capital formation enhance real net state GDP significantly in the long run. Further, a significant reduction in the real net state GDP is also observed during the Global Financial Crisis. This study is important for the Indian policymakers to formulate effective financial inclusion policies leading to the overall development of the Indian economy.

On the relationship between financial inclusion and bank performance

AbstractThis study examines the relationship between various financial inclusion measures and banks' performance across multiple countries with varying institutional, regulatory and income levels. To construct an aggregate bank performance index, we employ principal component analysis, which utilises a set of critical indicators summarised by the CAMEL rating system, including banks' solvency, asset quality, efficiency, profitability and liquidity. Our primary findings indicate that different measures of financial inclusion exhibit varying associations with bank performance. Specifically, there is a trade‐off between bank performance and credit deepening, especially in high‐income nations. Conversely, in low‐income nations, higher financial inclusion, measured by deposits to GDP, number of deposits, and number of borrowers, does not affect bank performance adversely. Banks in low‐income nations could achieve significant gains by improving financial access and enhancing regulatory environments.

Financial Inclusion and Its Impact on Economic Growth: An Empirical Evidence from South Asian Countries

Financial inclusion contributes to the growth of a country through developing financial infrastructure, which accelerates economic activities and creates employment. The study attempted to explore the contribution of financial inclusion on economic growth in 4 South Asian countries. In my study, I used various panel data models, and several measures of financial inclusion to reveal the relationship between economic growth and financial inclusion. The findings of the study confirmed that financial inclusion had a positive impact on economic growth in those countries although the extent of effect varies across different measures of financial inclusion. Therefore, policy makers in these countries must take necessary steps to accelerate financial inclusion activities to achieve robust economic growth.

IMPORTANCE OF FINANCIAL SERVICES’ TRANSPARENCY AND THE FINANCIAL EDUCATION FOR THE PROTECTION OF CONSUMER RIGHTS IN GEORGIA

George Gavtadze 
 Email:george.gavtadze@atsu.edu.ge
 Professor, Akaki Tsereteli State University 
 Kutaisi, Georgia
 https://orcid.org/0000-0001-6080-0163
 Aza Iphshiradze 
 Email:a.iphshirdze@unik.edu.ge
 Professor, Kutaisi University 
 Kutaisi, Georgia
 https://orcid.org/0009-0005-8373-3043
 
 Abstract. The issues of financial services’ transparency, consumer rights protection, financial education are relevant and the feasibility of their study is determined by the features of social-economic development. To overcome the problem, to some extent, it is possible to create and develop regulatory schemes for the protection of consumer rights. As research shows, priorities and practical implementation of consumer rights protection differ from country to country. The regulation is mainly aimed at providing complete information about the product to the consumer. However, in addition to imperative regulatory norms, in developed countries, the existence of self-regulation mechanisms, such as codes of conduct, is also of great importance.
 Despite the adoption of a number of laws and legislative acts, creation of regulatory documents, etc., in terms of further improvement of consumer rights protection, at the modern stage, the greatest emphasis is still placed on financial education and raising consumer awareness. Consumer rights protection and financial education are two sides of the same coin and serve the same purpose.
 For more than a decade, many countries have been implementing projects aimed at raising the level of financial education, which, for the most part, is manifested in the development of a national strategy for financial education. It should be noted that the need to develop a national strategy is often coupled with consumer financial protection and financial inclusion measures. At the same time, it should take into account and be adapted to the needs and shortcomings of a specific country.
 As a result of the analysis of the current situation, we can conclude that the improvement of financial services, the protection of consumer rights and their financial education can bring significant benefits not only to individuals or groups of people, but also to the country as a whole (both developed and developing).

Demand for Financial Services and its Determinants: Micro Empirical Evidences from West Bengal, India

The strength of the economy of a country is closely connected to the soundness and effectiveness of its financial system, in general, and the banking system, in particular. In the Indian scenario, the banking sector plays a great role in the inclusion of groups of people in the formal banking system. Financial inclusion is focused on providing financial services to all sections of the society at a reasonable cost. The traditional measures of financial inclusion are focused on the supply dimension of financial services, but not the demand perspective. After the implementation of financial inclusion drives like the Pradhan Mantri Jan Dhan Yojana (PMJDY), the demand side of financial inclusion gains new importance. This article attempts to recognize some of the demand-based parameters of the financial services after implementation of the PMJDY. The study is based on a primary survey conducted in some selected villages from the Bankura district of West Bengal, where the banking network is not adequate. Besides, the study also evaluates the effects of some socioeconomic factors of the demand of financial services. The empirical evidences show that the asset composition of the household and the income level of the family are effective in determining the demand for financial services.

Does Financial Inclusion Moderate CO2 Emissions in Sub-Saharan Africa? Evidence From Panel Data Analysis

Abstract The threat posed by climate change has become a reality in the public sphere. This research looks at how financial inclusion affects carbon dioxide emissions in Sub-Saharan Africa (SSA) countries from 2004 to 2017. The panel autoregressive distributed lag and panel granger causality approaches are used to determine if financial inclusion reduces CO2 emissions in Sub-Saharan African countries. The PARDL results demonstrated that, over time, financial inclusion, GDP per capita, industrialization, and trade openness have a substantial beneficial influence on carbon emissions in SSA countries. The result suggests that these considered variables contribute significantly to CO2 emissions while urbanization and energy intensity reduce CO2 emissions in SSA. Financial inclusion and other control variables have no significant impacts on carbon emission in SSA in the short run. The findings of the granger causality test further confirm the direction of causality, revealing that financial inclusion, GDP per capita, industrialization, energy intensity, and trade openness, granger cause carbon emission in SSA countries. Meanwhile, carbon emission does not granger cause any of the considered factors. The study concludes that financial inclusion increases carbon emission in SSA countries, given the poor state of financial inclusion. Our findings advocate for a policy framework that would focus efforts on connecting financial inclusion measures with environmental legislation across SSA nations.

Nexus between financial inclusion and Islamic financing distribution: Evidence from Indonesian MSMEs

Purpose – The purpose of this study is to investigate the relationship between financial inclusion and the distribution of Islamic banking financing to Indonesia's MSME industry.Methodology – This study utilizes the Vector Error Correction Model (VECM) approach covering the period between 2015 to 2020.Findings – The study's findings suggest that the use of all-inclusive financial variables, as represented by the number of ATMs, branch offices, and Third-Party Fund (TPF), has a significant effect on the distribution of financing in the short-term but not in the long term. Furthermore, macroeconomic as well as internal control variables, such as inflation and Non-Performing Financing, have been shown to have a significant influence. The impulse-response function analysis shows that the financing distribution responds positively to financial inclusion variables such as ATMs and branch offices. TPF, inflation, ROA, and exchange rate variables were found to have negative responses in the case of a shock.Implications – The findings of this study are expected to be used as a basis to develop government policies, particularly in supporting the post-COVID-19 national economic recovery through a comprehensive financial program that can broaden access to financing from Islamic banks for the general public, particularly MSME actors who have been severely impacted by the COVID-19 pandemic.Originality – This investigation utilizes three distinct indicators to assess the relationship between Islamic financing distribution in Islamic banking and financial inclusion for MSMEs. These include measures of financial inclusion, financial performance metrics of Islamic banking institutions, and macroeconomic variables.

Gender-Inclusive Development through Fintech: Studying Gender-Based Digital Financial Inclusion in a Cross-Country Setting

Financial inclusion (FI) for vulnerable populations, such as women, is critical for achieving gender equality, women’s empowerment, and thereby, inclusive growth. Sustainable development goal 5 considers gender equality as a fundamental right and views the empowerment of women as a necessary step. Access to finance is a significant means to empower a person. In this regard, the use of digital financial services is of particular significance for women as it allows them easier access to financial products for business and household needs. For implementing policies to reduce financial exclusion of women, it is necessary to first measure the extent of FI in society. While there are several attempts to measure FI for the general population, there is limited literature on the gender-based measurement of FI. This paper fills this important research gap by developing a gender-based FI index (GFII) focusing particularly on digital services and evaluating the performance of countries across the globe (by considering 109 countries based on data availability) in terms of a gender-based FI measure developed by us. This index is developed using two separate indices, a digital financial service usage index (DFI) and a conventional financial service usage index (CFI). We calculate it for different countries for 2011, 2014, 2017, and 2021 using the Global Findex databaseIt helps us to investigate the performance of different countries over the years in ensuring the financial inclusion of women and how digital services are penetrating over the years. One contribution of the paper is to relate the Gender Development Index (GDI) and Gender Inequality Index (GII) of countries, two well-known measures of inclusive and sustainable development, with GFII and DFI for female (DFIF). This exercise shows that while there is a positive correlation between these two sets of indicators, there are a number of countries that are high (or low) in gender development (or inequality) that need to improve their digital FI. Interestingly, using the Global Findex database and the Feasible Generalized Least Squares (FGLS) and instrumental variable panel data model, we show that health, education, labour force participation rate, and political empowerment of women significantly impact the digital financial inclusion of women. The paper brings out relevant policy suggestions for improving women’s digital financial access and thereby enhancing gender empowerment for faster and more inclusive growth.

THE STATE OF FINANCIAL INCLUSION AND DIGITIZATION IN PAKISTAN: INSIGHTS FROM THE GLOBAL FINANCIAL INCLUSION INDEX 2021

The purpose of this paper is to understand the determinants of financial inclusion and the reasons that impedes financial inclusion in Pakistan. Moreover, the preferences of individuals regarding formal and informal sector are also analyzed. For this, data have been taken from the Global Findex database 2021. Various measures of financial inclusion representing ownership, usage, and fintech are used. The independent variables used are: gender, age, education, and income. Due to the binary nature of dependent variable, we used Probit model technique for estimation. The results show that being female reduces the likelihood of financial inclusion while age and higher income increases it. Moreover, expensive financial services, financial constraint, and someone else having account are significant hurdles. Individuals prefer informal sector over formal for their savings and borrowing. The results of the study are useful for policy makers to focus on the determinants and hurdles proposed in this study

The depoliticisation of social policy through financial inclusion

PurposeThe purpose of this paper is to explore two financial inclusion measures adopted within the local welfare context of the city of Milan, Italy, examining their functioning and underpinning representations. The aim is also to understand how such representations take concrete shape in the practices of local actors, and their implications for the opportunities and constraints regarding individuals' effective inclusion. To this end, this paper takes a wide-ranging look at the interplay between the rise of financial inclusion and the individualisation and responsibilisation models informing welfare policies, within the broader context of financialisation processes overall.Design/methodology/approachThis paper draws on the sociology of public action approach and provides a qualitative analysis of two case studies, a social microcredit service and a financial education programme, based on direct observation and semi-structured interviews conducted with key policy actors.FindingsThis paper sheds light on the rationale behind two financial inclusion services and illustrates how the instruments involved incorporate and tend to reproduce, individualising logics that reduce the problem of financial exclusion, and the social and economic vulnerability which underlies it, to a matter of personal responsibility, thus fuelling depoliticising tendencies in public action. It also discusses the contradictions underlying financial inclusion instruments, showing how local actors negotiate views and strategies on the problems to be addressed.Originality/valueThe paper makes an original contribution to the field of sociology and social policy by focusing on two under-researched instruments of financial inclusion and improving understanding of the finance-welfare state nexus and of the contradictions underpinning attempts at financial inclusion of the most vulnerable.