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Article
Publication date: 9 December 2020

Xiao-Ling Song, Ya-Ge Jing and Kade'erya Akeba'erjiang

This study aims to empirically analyze the factors influencing digital financial inclusion in China.

Abstract

Purpose

This study aims to empirically analyze the factors influencing digital financial inclusion in China.

Design/methodology/approach

Using panel data from 31 provinces in China for the years 2011-2018, the study constructed spatial econometric models for regression analysis at the national and regional levels.

Findings

Economic development, government intervention, internet penetration and the development of the credit level significantly affected the development of digital financial inclusion in China. However, the specific influence of the various factors varied by province. Provinces with less-developed economies generally had weaker economic foundations and underdeveloped digital financial services, making it more difficult to fully achieve digital financial inclusion.

Practical implications

Relevant government policies should strengthen digital infrastructure and improve the organizational systems and services of digital finance to support the balanced development of digital financial services in China.

Originality/value

China’s e-commerce development has been at the global forefront for decades, which suggests digital financial inclusion is also well-placed for strong development in China. However, quantitative research on the digital financial inclusion index has remained insufficient in China and worldwide, with most research ignoring the status of different development levels in a different region. To address this gap in the literature, this study empirically researched the status, regional differences and causes associated with these differences that impact digital financial inclusion in China.

Details

International Journal of Development Issues, vol. 20 no. 2
Type: Research Article
ISSN: 1446-8956

Keywords

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Article
Publication date: 31 May 2021

Hasanul Banna and Md Rabiul Alam

This paper aims to investigate how digital financial inclusion (DFI) can be a potential factor to maintain banking stability in Association of Southeast Asian Nations…

Abstract

Purpose

This paper aims to investigate how digital financial inclusion (DFI) can be a potential factor to maintain banking stability in Association of Southeast Asian Nations (ASEAN) countries and whether the relationship could bring a possible implication for the post-Covid-19 pandemic era.

Design/methodology/approach

Using an unbalanced panel data of 213 banks of 4 ASEAN countries, the study has deployed principal component analysis, ordinary least square, two-step dynamic system generalised method of moments and panel corrected standard errors techniques.

Findings

The empirical study finds that the full-fledged application of DFI accelerates the ASEAN banking stability which not only decreases the default risk of the banks but also upturns the financial mobility in the region. The results also suggest that ASEAN banks are, with the implementation of DFI, likely to uphold the banking sector stability by reducing liquidity crisis and non-performing loans during and in the post-Covid-19 era. Therefore, accelerating digital finance in ASEAN countries is considered as one of the significant means for the banking sector stability that subsequently leads to economic and financial resilience even in the face of any crises.

Originality/value

Prevailing studies have mostly investigated the association between financial inclusion and banking stability in different contexts. However, this study is unique to empirically investigate the association between DFI and the ASEAN banking stability.

Details

Studies in Economics and Finance, vol. 38 no. 2
Type: Research Article
ISSN: 1086-7376

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Article
Publication date: 14 January 2021

Yang Liu, Chunyu Liu and Mi Zhou

The development of digital inclusive finance appears to be able to solve the difficulty of traditional finance, which cannot completely cover agriculture and farmers and…

Abstract

Purpose

The development of digital inclusive finance appears to be able to solve the difficulty of traditional finance, which cannot completely cover agriculture and farmers and provides better financial services and products to Chinese farmers. Thus, it improves the farmers' enthusiasm for agricultural production. The purpose of this paper is to clarify whether this goal is indeed being achieved.

Design/methodology/approach

This paper theoretically analyzes the mechanism that influences the effect of digital inclusive finance on rural households' agricultural production decisions and conducts an empirical study based on a sample from the Chinese family database (CFD).

Findings

First, the development of digital financial inclusion in general can encourage rural households to reduce agricultural production. Second, the negative effect of digital inclusive finance on households' agricultural output is realized by widening the gap between the efficiency of non-agricultural economic activities and the efficiency of agricultural production. The wider the gap is, the lower the enthusiasm of households for agricultural production. Third, the mediating effect of “digital financial inclusion – difference in efficiency – agricultural output” has a significant negative effect on households with low agricultural production efficiency, but not households with high agricultural production efficiency. Digital inclusive finance has no significant effect on the difference in efficiency between the two economic activities of high-efficiency households, but a greater difference in efficiency between the two economic activities corresponds to higher enthusiasm of households for agricultural production.

Originality/value

To the best of our knowledge, this paper is the first to analyze the impact of digital financial inclusion on Chinese farmers' agricultural production. The findings of this study can provide policy-related insights to help local governments promote the development of digital finance in China's agricultural economy.

Details

China Agricultural Economic Review, vol. 13 no. 2
Type: Research Article
ISSN: 1756-137X

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Article
Publication date: 18 August 2021

Hasanul Banna, M. Kabir Hassan, Rubi Ahmad and Md Rabiul Alam

This paper aims to explore the role of digital financial inclusion (DFI) in stabilizing the Islamic banking sector amidst the current COVID-19 pandemic.

Abstract

Purpose

This paper aims to explore the role of digital financial inclusion (DFI) in stabilizing the Islamic banking sector amidst the current COVID-19 pandemic.

Design/methodology/approach

This study has used the Panel-Corrected Standard Errors (PCSE), Two-Stage Panel Least Squares-Instrumental Variables (2SLS-IV) and Two-Step System Generalized Method of Moments (2SGMM) dynamic panel estimation method to investigate the DFI-Islamic banking stability nexus using an unbalanced panel data of 65 Islamic banks from six countries over the period 2011–2020.

Findings

The result suggests that greater implementation of DFI promotes Islamic banking stability, which reduces the default risk of the banks in the studied region. Consequently, incorporating DFI into the Islamic banking sector encourages inclusive economic growth that can keep the financial sector sustainable even in a crisis period like the current COVID-19 pandemic.

Originality/value

Unlike previous studies, the authors have focused mainly on DFI and the Islamic banking sector. This is one of the first to explore how DFI contribute to the stability and productivity of the Islamic banking sector during the pandemic. Also, this study provides fresh evidence on how the supply and demand side of DFI impact Islamic banking stability.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 4 June 2020

Guangcheng Xu and Zhixiang Zhou

The purpose of this paper is to evaluate Chinese commercial banks efficiency based on different non-performing loans in the process. Moreover, we identified the difference…

Abstract

Purpose

The purpose of this paper is to evaluate Chinese commercial banks efficiency based on different non-performing loans in the process. Moreover, we identified the difference among different types of banks (state-owned commercial banks, joint-stock commercial banks and city commercial banks) and different operation stages (deposit producing sub-stage, profit earning sub-stage and overall stage).

Design/methodology/approach

Assurance region (AR) restrictions are combined with a two-stage data envelopment analysis (DEA) model. The efficiency scores of 26 Chinese commercial banks (listed banks) are analyzed by a two-stage AR-DEA model in the study period of 2013–2017.

Findings

The results show that state-owned commercial banks had better performance than joint-stock commercial banks and city commercial banks over the five-year study period. The development of Internet finance has positive impact on deposit producing sub-stage and insignificant non-homogeneity existed among the different groups in the circumstances of considering different non-performing loans.

Practical implications

The research findings provide practical insights that help bank managers find the defects in operation process, which need to be improved.

Originality/value

Previous studies viewed non-performing loans as an integrated whole variable. The paper divides non-performing loans into three categories based on the risk and investigates the effect of different types of loans on bank efficiency scores.

Details

Industrial Management & Data Systems, vol. 121 no. 4
Type: Research Article
ISSN: 0263-5577

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Article
Publication date: 23 July 2020

Sisira Dharmasri Jayasekara

The purpose of this paper is to discuss the dilemma of digital banking and the financial inclusion agenda of countries with the level of strength of the anti-money…

Abstract

Purpose

The purpose of this paper is to discuss the dilemma of digital banking and the financial inclusion agenda of countries with the level of strength of the anti-money laundering and countering the financing of terrorism (AML/CFT) regime.

Design/methodology/approach

This study develops an AML/CFT compliance index using the assessment data of FATF to measure the level compliance strength of countries to measure the impact of the strength of the AML/CFT regime on the financial inclusion. Financial literacy, literacy, number of bank branches and income level of countries are used as other control variables in regression analysis, which is used to test the developed model.

Findings

The results suggest that the AML/CFT compliance level of a country is a significant factor in determining the level of financial inclusion. Besides, the number of bank branches for 100,000 people, literacy and financial literacy are significant factors in financial inclusion. However, the results reveal that financial literacy is significant over literacy in determining financial inclusion. Therefore, having considered the importance of the AML/CFT regime for financial inclusion, regulators are required to strengthen the AML/CFT regime and make clarity on the AML/CFT regulations. This clarity will promote the digitalization and financial inclusion over time.

Practical implications

Most of the studies related to financial inclusion and AML/CFT aspects are qualitative. Therefore, this is only the start of measuring the strength of an AML/CFT regime. More appropriate measures will be developed in the future based on this foundation.

Originality/value

This paper is an original work done by the author, which discusses the issues of digital banking and financial inclusion agenda of countries with the compliance strength of the AML/CFT regime. The AML/CFT compliance index is the original idea of the author, which can be used as a quantitative measure to capture the strength of the AML/CFT regimes in future studies.

Details

Journal of Money Laundering Control, vol. 24 no. 1
Type: Research Article
ISSN: 1368-5201

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Article
Publication date: 2 November 2020

Muhammad Nabeel Safdar, Tian Lin and Saba Amin

This study, a symposium, aims to explore the determinants of financial inclusion, impact of cross-country income-variations on financial inclusion, do high-income…

Abstract

Purpose

This study, a symposium, aims to explore the determinants of financial inclusion, impact of cross-country income-variations on financial inclusion, do high-income countries really uplift the financial inclusion and does the higher financial inclusion index indicate the larger economy?

Design/methodology/approach

This study adopts the panel data model to investigate the impact of high-income countries and low- and middle-income countries on financial inclusion. However, this study further adopts the principal component analysis rather than Sarma’s approach to calculate the financial inclusion index.

Findings

Based on the Data of World Bank, United Nations, International Monetary Fund, World Development Indicators, this study concludes that there is no nexus between income variations and financial inclusion, as the study reveals that some low- and middle-income countries have greater financial inclusion index such as Thailand (2.8538FII), Brazil (1.9526FII) and Turkey (0.8582FII). In low- and middle-income countries, the gross domestic product per capita, information technology and communication, the rule of law, age dependency ratio and urbanization have a noteworthy impact on financial inclusion that accumulatively describe the 83% of the model. Whereas, in high-income countries, merely, information technology and urbanization have a substantial influence on the growth of financial revolution and financial inclusion that describes the 70% of the total.

Research limitations/implications

The biggest limitation is the availability of data from different countries.

Originality/value

The originality of this paper is its technique, which is used in this paper to calculate the financial inclusion index. Furthermore, this study contributes to 40 different countries based on income, which could help to boost financial inclusion, and ultimately, it leads them toward economic growth.

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Article
Publication date: 14 June 2021

Vishal Vyas and Priyanka Jain

The study aims to explore the role of digital economy and technology adoption for financial inclusion in the Indian context.

Abstract

Purpose

The study aims to explore the role of digital economy and technology adoption for financial inclusion in the Indian context.

Design/methodology/approach

A conceptual framework was developed and hypotheses were tested through a survey conducted on 433 educated adults (males and females) residing in different districts of Rajasthan (India). Data was collected through a structured questionnaire and was subjected to confirmatory factor analysis. Structural equation modeling (second-order) was used to validate the measurement model and to test the mediating effect.

Findings

The measurement model is a confirmatory factor analysis and measures the reliability of the observed variables in relation to the latent constructs and indices shows the overall model fit. Structural model results indicate a complete mediation and a reflective impact (R2 = 0.28) of the extended technology acceptance model on digital economy and financial inclusion relationship.

Research limitations/implications

The study has taken into account only the perception of educated adults residing more specifically in one geographical area of a country. Thus, it limits the generalization of results in terms of implications to other regions and countries.

Practical implications

The proposed framework and implications are quite significant for policymakers and service providers to understand the nexus and strategic choices involved in this area. Moreover, understanding of user’s frame dependence would help in the development of digital assistive models that would perhaps mitigate the gap from participation (digital economy) to acceptance (financial inclusion).

Originality/value

Present study proposed a three-dimensional hypothetical model and conceptualized the digital economy (independent variable) as participation, behavioral intentions measured through the extended technology acceptance model (mediating variable) as adoption and financial inclusion (dependent variable) as acceptance to better understand the nexus. It represents the foremost step and a unique effort in this area. Moreover, the study was empirical and has wider applications both from the perspectives of end-users and service providers.

Details

Indian Growth and Development Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8254

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Abstract

Details

Inclusive Growth
Type: Book
ISBN: 978-1-78973-780-6

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Article
Publication date: 29 April 2021

Elhadj Ezzahid and Zakaria Elouaourti

This study has a dual purpose. The first is constructing a financial inclusion index to investigate if the reforms implemented during the last decades at the macroeconomic…

Abstract

Purpose

This study has a dual purpose. The first is constructing a financial inclusion index to investigate if the reforms implemented during the last decades at the macroeconomic and sectoral levels have contributed to increase the financial inclusion level in Morocco. The second is to deepen the investigation to explore the impact of these reforms at the microeconomic level, by focusing on six major issues: determinants of financial inclusion, links between individual characteristics and barriers to financial inclusion, determinants of mobile banking use, motivations for saving, credit objectives and determinants of resorting to informal finance.

Design/methodology/approach

First, the principal component analysis methodology is mobilized to construct a financial inclusion index for Morocco. Second, the probit model methodology on a micro-level database of 5,110 Moroccan adults is used.

Findings

First, the financial inclusion index shows that financial inclusion in Morocco over the last two decades has followed different trends. The first period (1999–2004) was characterized by a slight upswing in the level of financial inclusion. In the second period (2004–2012), the level of financial inclusion increased significantly. During the third period (2012–2019), the financial inclusion maintained almost the same level. Second, empirical results showed that the determinants of formal finance and mobile banking are different from those of informal finance. Having a high educational attainment and being a participant in the labor market fosters financial inclusion. Concerning financial exclusion determinants, the results emphasized that a high educational attainment reduces the barriers leading to voluntary exclusion. As income level increases, barriers of involuntary exclusion such as “lack of money” become surmountable. Although "remoteness" and "high cost" are the major barriers to financial inclusion of all Moroccan social classes, the development of mobile banking allows to eliminate, smoothen and/or loosen all barriers sources of involuntary exclusion. As for the barriers causing voluntary exclusion, the Islamic finance model constitutes a lever for the inclusion of population segments excluded for religious reasons. As for the determinants of the recourse to informal finance, being a woman, an older person and having a low educational level (no more than secondary education) increase the probability to turn to informal finance.

Research limitations/implications

The main limitation of this study is the non-availability of data on the two dimensions (quality and welfare) of financial inclusion. The composite index is constructed on the basis of two dimensions (access and use) for which data are available.

Practical implications

This study has three main implications. In practice, with the launching of the National Strategy for Financial Inclusion, this work provides empirical grounded evidence that contributes to design financial inclusion policies in Morocco. In research, while the debate on financial inclusion, mobile banking and informal finance has been raging in recent years, Morocco, like many other African countries, has not received coverage on these topics at the household level.

Social implications

For society, this study provides considerable insight about the segments of population that are financially excluded and the main reasons for their exclusion.

Originality/value

This study enriches the existing literature with four essential contributions. First, it analyzes the evolution of the level of financial inclusion in the Moroccan economy through the development of a synthetic index. Second, it is the first to study the Moroccan population's financial behavior on the basis of micro-level data, which will help understand more precisely their financial behavior and the main obstacles to their inclusion. Third, this study explores the determinants of the use of mobile banking. Fourth, it sheds some light on the main determinants of the recourse to informal finance.

Details

International Journal of Social Economics, vol. 48 no. 7
Type: Research Article
ISSN: 0306-8293

Keywords

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