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Measuring impact of financial inclusion on rural development through cooperatives

Tarsem Lal (P.G. Department of Commerce, University of Jammu, Jammu, India)

International Journal of Social Economics

ISSN: 0306-8293

Article publication date: 31 October 2018

Issue publication date: 19 February 2019




The purpose of this paper is to measure the impact of financial inclusion on rural development through cooperatives.


The primary data were collected from 540 beneficiaries of Cooperatives banks operating in three northern states of India, i.e., J&K, Himachal Pradesh and Punjab using purposive sampling during January to June 2016. Exploratory factor analysis, confirmatory factor analysis, ANOVA, t-test and structural equation modelling were used for scale purification and data analysis.


The findings of the study revealed that financial inclusion through cooperatives has direct and significant impact on rural development. Further, the results support the notion that financial inclusion is a strategy of inclusive growth, but inclusive growth itself is a subset of a larger set of inclusive development which means that the benefit must reach the all, particularly the women and the children, minority groups, the extremely poor and those pushed below the poverty line by natural and human-made disasters.

Research limitations/implications

The research has certain inescapable limitations. First, the in-depth analysis of the study is restricted to three northern states of India only because of time and resource constraints. Second, the study is confined to the perception of financial inclusion beneficiaries only, which in future could be carried further on the perception of other stakeholders such as SHGs, banking correspondents, etc. Third, possibility of subjective interpretation in some cases cannot be ruled out.


The study makes contribution towards financial inclusion literature relating to sustainable rural development and fulfils the research gap to some extent by assessing the impact of financial inclusion on rural development through cooperatives.



The author of this paper has not made their research data set openly available. Any enquiries regarding the data set can be directed to the corresponding author.


Lal, T. (2019), "Measuring impact of financial inclusion on rural development through cooperatives", International Journal of Social Economics, Vol. 46 No. 3, pp. 352-376.



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