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Book part
Publication date: 28 September 2020

Peterson K. Ozili

This chapter examines various conditions for optimality in financial inclusion. The optimal level of financial inclusion is achieved when basic financial services are…

Abstract

This chapter examines various conditions for optimality in financial inclusion. The optimal level of financial inclusion is achieved when basic financial services are provided to members of the population at a price that is affordable and that price is also economically sufficient to encourage providers of financial services to provide such financial services on a continual basis. Any level of financial inclusion that does not meet these conditions is sub-optimal and incentive-inefficient both for users and providers of financial services.

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Article
Publication date: 20 September 2021

George Okello Candiya Bongomin, Francis Yosa and Joseph Mpeera Ntayi

Mobile money is a service in which the mobile phone is used to access financial services. Thus, the mobile money platform should be user-friendly with hedonic features…

Abstract

Purpose

Mobile money is a service in which the mobile phone is used to access financial services. Thus, the mobile money platform should be user-friendly with hedonic features that are attractive and pleasurable to the users. The main purpose of this paper is to establish the mediating effect of hedonism in the relationship between mobile money adoption and usage and financial inclusion of micro small and medium enterprises (MSMEs) in Uganda.

Design/methodology/approach

This study reports interesting findings by using data obtained from MSMEs located in northern Uganda. The structural equation and measurement models were generated in analysis of moment structures (AMOS) to answer the hypotheses of this study.

Findings

The findings suggest that including hedonism in the model improves mobile money adoption and usage by 12.7 percentage points in order to promote financial inclusion of MSMEs in Uganda. Hedonism is found to affect mobile money adoption and usage, which in turn influences financial inclusion.

Research limitations/implications

This study used cross-sectional data to document the mediating effect of hedonism in the relationship between mobile money adoption and usage and financial inclusion. The study analyzed mobile money adoption and usage, hedonism, and financial inclusion from the MSMEs owners' perspective. Future research could use relevant longitudinal data to verify multiple benefits of hedonism in enhancing mobile money adoption and usage as well as other potential digital financial technologies.

Practical implications

This study categorically informs mobile telephone network operators and inventors of mobile money applications to invest more in developing pleasurable and user-friendly mobile money features that can attract more users. The digital financial services' application developers should design user-friendly mobile money applications that suit the needs of all users. This requires careful understanding of diverse attractive features of mobile money services.

Originality/value

This study offers direction to developers of mobile money applications to design pleasurable and user-friendly mobile money platform with features, which are attractive to the different users. Particularly, it highlights the role of hedonic motivation in promoting adoption and use of mobile money technology to increase the scope of financial inclusion of MSMEs in a developing country like Uganda. Indeed, the novelty in this paper is grounded on a blend of financial technology and psychology to promote financial inclusion in under developed economies.

Details

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

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Article
Publication date: 13 August 2021

Tarsem Lal

The purpose of this paper is to check the impact of financial inclusion on economic development of marginalized communities through the mediation of socio-economic empowerment.

Abstract

Purpose

The purpose of this paper is to check the impact of financial inclusion on economic development of marginalized communities through the mediation of socio-economic empowerment.

Design/methodology/approach

In order to fulfil the objectives of the study, primary data were collected from 382 bank customers belonging to marginalized communities breathing in Jammu district of J and K by using purposive sampling technique. The data were collected during the month of April–August 2020. Multivariate statistical techniques such as EFA, CFA and SEM were used for data analysis and scale purification.

Findings

The study’s results reveal that financial inclusion has a direct and significant impact on economic development of marginalized communities through the mediation of social and economic empowerment. The study highlights that despite various initiatives taken by the government towards financial inclusion, there is a denial from the financial institutions to extend the credit to the marginalized communities due to lack of education, illiteracy, lack of awareness, attitude of bankers and policy directions to the banking sector, which confine these communities to feel proud, dignified, confident and self-reliant to face any financial crisis.

Research limitations/implications

First the in-depth analysis of the study is restricted to Jammu district only that restricts the generalization of the results to the whole population of J and K. Second, the data were collected from respondents belonging to marginalized communities only. Third, comparative study of marginalized households who are covered under the financial inclusion drive and those who are still financially excluded has not been done yet. Fourth, the questionnaire approach was the only way to gather primary data and thus, the results might have a common-method bias.

Originality/value

The study makes contribution in the direction of financial inclusion narrative relating to socio-economic empowerment and economic development of marginalized communities. It looks into how for the socio-economic aspects of marginalized communities influence their exclusion from the financial system of the country. The study also provides valuable insights for the policymakers, researchers and academicians both at the countrywide and intercontinental level to devise and put into practice programmes that will widen right to use financial products and services leading to cutback of poverty incidence, income parity, social and economic empowerment, economic development and reduction in caste and gender based discrimination.

Details

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

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Article
Publication date: 27 July 2021

Girish Joshi, Bindya Kohli and Sandeep Nalawade

This paper aims to investigate whether small finance banks (SFBs) in India are working towards financial inclusion through qualitative studies.

Abstract

Purpose

This paper aims to investigate whether small finance banks (SFBs) in India are working towards financial inclusion through qualitative studies.

Design/methodology/approach

This paper uses a phenomenological approach in which semi-structured interviews were conducted with the employees of two SFBs in Mumbai with different specializations. Employee experience was captured to grasp, interpret and code data for the creation of different themes.

Findings

This research shows that the current literature on financial inclusion is inadequate to explain the behavior of the needy in India. Study found multiple themes of financial inclusion, namely, financial literacy, self-esteem, use of technology, prompt repayment, credit identity, cross-referencing and financial stability. Although overall results are positive, to generalize the results, SFBs need to spend some more time in business. The findings of this study can be of global benefit to micro-finance organizations of a similar scale to achieve financial inclusion and business improvement.

Research limitations/implications

This qualitative study was performed at a single location and with a limited sample size, which underlines the need for repeated exercises at multiple locations with a larger sample size to establish a broader logical generality. It also points out the need for a study of employee themes to enhance the business processes of SFBs.

Originality/value

To the best of the authors’ knowledge, this qualitative study is first attempt to figure out the extent of work done by SFBs in India in promoting financial inclusion. Themes related to financial inclusion can provide further thought process for policymakers for financial inclusion and business improvement. Findings refer not only to Indian organizations but also to small banks around the world to recognize the underpinnings of financial inclusion and what small banks and micro-finance institutions can do to make it meaningful.

Details

Qualitative Research in Financial Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 26 July 2021

Biplob Kumar Nandi, Gazi Quamrul Hasan and Md. Humayun Kabir

This study aims to examine the impact of financial inclusion on per capita gross domestic product (GDP) at varying degrees of financial inclusion for a sample of 76…

Abstract

Purpose

This study aims to examine the impact of financial inclusion on per capita gross domestic product (GDP) at varying degrees of financial inclusion for a sample of 76 developing countries between 2011 and 2017. To evaluate the heterogeneous impact, this paper constructs the multi-dimension index of financial inclusion to classify sample countries into two sub-samples in terms of the value of FIID, taking account of three dimensions of financial inclusion: access, usage and availability.

Design/methodology/approach

This study attempts to identify the presence of reverse causality and long-run relationship between financial inclusion and economic growth by using the Granger causality test (Wald test) and three alternative panel cointegration tests (Kao Test, Pedroni Test, Westerlund Test) respectively. Because of the existence of the bi-directional causality between financial inclusion and per capita GDP, this study uses a fixed effect instrumental variable model with lagged dependent variable to get unbiased estimators from the panel regressions for sample countries.

Findings

This paper finds a strong positive impact of financial inclusion on per capita GDP growth in sample developing countries, controlling for labor market structure, financial institutions’ efficacy, infrastructural and governance issues. This study suggests that economic growth will be high in developing economies with a higher level of financial inclusion; however, the positive impact for two sub-samples countries (low and medium level of inclusion and high level of inclusion) are heterogeneous. The estimated result explains that a 1% increase in the financial inclusion index leads to a 0.0153% point increase in the per capita GDP for the countries with a low and medium level of financial inclusion, while this positive impact is significantly higher, 0.0794% point for countries with the high level of financial inclusion. This study also suggests that the higher concentration in the financial market by few agents and the lower level of governance may have an adverse impact on economic growth for the economies with a low and medium level of financial inclusion.

Originality/value

This study is an original study that contributes to the research gap by explaining the heterogeneous impact of financial inclusion on economic growth at varying degrees of inclusion in the two sub-sample countries. Moreover, this study posits greater appeal as it explores the issue using the sample of only developing economies.

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Article
Publication date: 20 July 2021

Mouna Amari and Jarboui Anis

This paper aim to fill the gaps by looking for the determinants and barriers related to financial inclusion. This study assesses the effect of socio-demographic variables…

Abstract

Purpose

This paper aim to fill the gaps by looking for the determinants and barriers related to financial inclusion. This study assesses the effect of socio-demographic variables on the use of formal financial inclusion services.

Design/methodology/approach

This article examines the barriers to formal financial inclusion, focusing on saving and credit strands. The authors propose the probit model, allowing distinguishing the outcome variable into three categories: Formal inclusion, informal inclusion and financial exclusion. The authors apply this model to the Findex 2017 survey data.

Findings

Estimation results propose that the trust to financial institutions, the distance to banks, the lack of documentation and the service costs are the main barriers, but these barriers affect the probability of using formal financial services differently according to the types of financial services (saving or credit).

Research limitations/implications

To advance the formal financial inclusion in Tunisia, the authors call for continuing promoting financial literacy among adults and the young population, which helps them understand the benefits of using formal financial services. Financial literacy throws in constructing the individual trust toward the financial sector in a country that experienced several decades of political and economic instability.

Originality/value

Financial inclusion promotes growth through a broadening of the system and technology that can be a major catalyst for greater financial inclusion. It helps in the overall economic development of the underprivileged population and contributes to poverty reduction. It can also enhance the security of payments, and thus lower the incidence of associated crime.

Details

International Journal of Social Economics, vol. 48 no. 9
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 3 May 2021

Amari Mouna and Anis Jarboui

To help inform the debate over whether socio-demographic characteristics are related to the use of digital technologies, the authors investigated the effects of age…

Abstract

Purpose

To help inform the debate over whether socio-demographic characteristics are related to the use of digital technologies, the authors investigated the effects of age, gender, education, income and being in the workforce on changes in using financial digital services using panel data collected in the MENA countries during 2017.

Design/methodology/approach

This study aims to identify the impact of government policy on the determinants of financial inclusion and digital payment services in the MENA region. The authors use microdata from the 2017 Global Findex database on MENA countries to perform probit estimations. The paper focuses on the role of technology adoption by government authorities in extending financial inclusion and digital payment around different people.

Findings

The authors find that poorer people (and, by association, less educated people) and the young (but less so the elderly) are disproportionately excluded from the financial system. Results confirm that better collaboration between the government and the financial sector can help to develop digital financial inclusion through the technology adoption channels. The study confirms the significant impact of the government cashless policy in advancing financial inclusion in the MENA countries, with potentially wider applicability to other developed economies.

Practical implications

Policies to advance mobile money innovations could stimulate financial inclusion by promoting digital transaction services. The role of government authorities is imperative to harness the beneficial and sustainable gains from digitizing remittances and transfers to promote a cashless economy.

Originality/value

Financial inclusion promotes equality through a broadening of the system and government cashless policy can be a major catalyst for greater financial inclusion. It helps in the overall economic development of the underprivileged population and contributes to poverty reduction.

Details

International Journal of Sociology and Social Policy, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0144-333X

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Book part
Publication date: 25 September 2020

Peterson K. Ozili

Purpose: This purpose of this chapter is to present several theories of financial inclusion. Financial inclusion is the ease of access to, and the availability of, basic…

Abstract

Purpose: This purpose of this chapter is to present several theories of financial inclusion. Financial inclusion is the ease of access to, and the availability of, basic financial services to all members of the population. Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs in a responsible and sustainable way. Financial inclusion practices vary from country to country, and there is need to identify the underlying principles or propositions that can explain the observed variation in financial inclusion practices. These set of principles or propositions are called theories.

Methods: The chapter uses conceptual discussions to formulate alternative theories of financial inclusion.

Findings: The study shows that financial inclusion theories are explanations for observed financial inclusion practices. It also shows that the ideas and perspectives on financial inclusion can be grouped into theories to facilitate meaningful discussions in the literature.

Originality/value: Currently, there are no observed or elaborate theories of financial inclusion in the policy or academic literature. This chapter is the first attempt to develop theories of financial inclusion. The theories are intended to be useful to researchers, academics and practitioners. The resulting contributions to theory development are useful to the problem-solving process in the global financial inclusion agenda.

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Book part
Publication date: 21 May 2021

Peterson K. Ozili

Purpose: This chapter presents criticisms of financial inclusion.Methodology: This chapter uses critical discourse analysis to critique the modern financial inclusion

Abstract

Purpose: This chapter presents criticisms of financial inclusion.

Methodology: This chapter uses critical discourse analysis to critique the modern financial inclusion agenda.

Findings: The findings reveal that (i) financial inclusion is an invitation to live by finance and leads to the financialization of poverty; (ii) some of the benefits of financial inclusion disappear after a few years; (iii) financial inclusion ignores how poverty affects financial decision-making; (iv) it promotes digital money which is difficult to understand; (v) financial inclusion promotes the use of transaction accounts; (vi) digital money is difficult to understand; and that (vii) some financial inclusion efforts bear a resemblance to a campaign against having cash-in-hand.

Implication: This study will help policymakers in their assessment of the economic, social, political, and cultural factors that hinder financial inclusion as well as the consequence of financial inclusion for society. For academics, this study will provide a critical perspective to on-going financial inclusion debates in the large positivist literature on financial inclusion.

Originality: Currently, there are no studies that use critical discourse analysis to analyze the broader concept of financial inclusion. This chapter is the first study that uses critical discourse analysis to critique some aspects of the modern financial inclusion agenda.

Details

New Challenges for Future Sustainability and Wellbeing
Type: Book
ISBN: 978-1-80043-969-6

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Article
Publication date: 30 April 2021

Prabhakar Nandru, Madhavaiah Chendragiri and Arulmurugan Velayutham

The study attempts to explore the determinants of financial inclusion. Subsequently, it examines the effect of financial inclusion on financial well-being of marginalized…

Abstract

Purpose

The study attempts to explore the determinants of financial inclusion. Subsequently, it examines the effect of financial inclusion on financial well-being of marginalized street vendors in India.

Design/methodology/approach

The demand-side analysis of measuring financial inclusion with a sample of 371 marginalized street vendors is adopted. Both exploratory and descriptive research designs are employed in this study. The primary data collection is done by administering the structured interview schedule by using a convenience sampling technique. Confirmatory factor analysis (CFA) and structural equation modeling (SEM) are performed to describe the latent constructs and their hypothetical relationships with adequate empirical evidence.

Findings

Out of five dimensions of financial inclusion considered for the study, accessibility, availability, usage and affordability are found to be significant determinants of financial inclusion; however, the financial literacy dimension is found statistically insignificant. Further, the study results confirm that financial inclusion contributes substantially to the well-being of marginalized street vendors.

Research limitations/implications

The outcome of the study will facilitate all the stakeholders including policymakers and financial institutions to enact policy guidelines to ensure financial well-being of the marginalized street vendors through financial inclusion initiatives.

Originality/value

Financial well-being through financial inclusion is possible even without the effect of financial literacy from the unorganized sector perspective specifically marglianized street vendors. Thus, it adds new dimension to the existing literature on demand side analysis of measuring financial inclusion.

Details

International Journal of Social Economics, vol. 48 no. 8
Type: Research Article
ISSN: 0306-8293

Keywords

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