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Article
Publication date: 29 June 2018

Sanjaya Kumar Lenka and Rajesh Barik

The purpose of this study is to measure the availability, accessibility and usability of financial products and services in both rural and urban India from 1991 to 2014.

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Abstract

Purpose

The purpose of this study is to measure the availability, accessibility and usability of financial products and services in both rural and urban India from 1991 to 2014.

Design/methodology/approach

This paper uses principal component analysis (PCA) method to construct financial inclusion index that serves as a proxy variable for indicating the inclusiveness of financial products and services among the rural and urban people. To fulfill this objective, the study proposes separate indexes of financial inclusion for both rural and urban India from 1991 to 2014. The paper uses annual time series data from 1991 to 2014 to construct the rural-urban financial inclusion index. The used data have been collected from the basic statistical returns of Reserve Bank of India and Economic Political Weekly research foundation.

Findings

The study inferences that though there is a remarkable increase in financial inclusion in India from 1991 onwards, it does not result in sizeable growth of financial access to rural masses in comparison to urban masses. The rural India does not substantiate an equivalent growth to that of urban India, contrasting a perceptible increase in financial inclusion. The finding of this study will help the researchers and policymakers to understand the status of financial inclusion in the context of both rural and urban India. Furthermore, policymakers can take appropriate policy initiatives to fulfill the financial inclusion gap that exists between rural and urban people. Additionally, the proposed index is easy to compute and can be used to make comparison across countries for further studies.

Originality/value

The present paper attempts to include all possible dimensions (and indicators within a dimension) that have been considered so far by various authors. Therefore, the authors hope that this index will be more indicative and accurate than previous index. Again, the authors propose to use PCA for the first time to assign the weight of factors in the financial inclusion index for rural and urban India separately.

Book part
Publication date: 21 May 2021

Peterson K. Ozili

Purpose: This chapter proposes a number of measures for financial inclusion and financial exclusion.Method: The author use ratio analysis and statistics to develop several indices

Abstract

Purpose: This chapter proposes a number of measures for financial inclusion and financial exclusion.

Method: The author use ratio analysis and statistics to develop several indices of financial inclusion.

Findings: This chapter finds that there are several indices of financial inclusion that can contribute to inform policy making in the financial inclusion agenda.

Implications: The indices developed in this chapter can help policymakers toward designing better financial inclusion policies and can provide feedback and insight to policy makers to improve current financial inclusion policies.

Originality: The literature on financial inclusion and exclusion lacks a comprehensive index that measures the extent of financial inclusion and exclusion across countries. This chapter attempts to fill this gap by proposing some index or indicators of financial inclusion and exclusion.

Details

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

Keywords

Abstract

Purpose

This paper proposes a new multi-dimensional financial inclusion index.

Design/methodology/approach

The authors employ two-stage principal component analysis (PCA) and aggregating indicators of availability, access and use. The paper first assesses the cross-country variations in the index and analyses trends over time for a sample of countries members of the Union for the Mediterranean (UfM) from 2010–2018. Second, it investigates factors that could explain the level of financial inclusion across countries.

Findings

The financial inclusion index shows a downward trend for the full sample over the period under investigation; however when splitting the sample by income group, it appears that high- and middle–income countries did not register the same trend. When examining the determinants of financial inclusion for the UfM countries, the authors find that macroeconomic, social and governance factors, as well as banking conditions, matter. Policy-makers in low- and middle-income economies should consider the importance of digital financial inclusion, which is substituting the role to traditional banking system, to close the gap and accelerate its development.

Originality/value

First, the authors provide a new measure of financial inclusion using a three-dimensional index: availability, access and use, for which weights are assigned using PCA. It uses data available for the UfM sample by combining data from different databases in order to include most indicators considered in the literature, as the majority of studies only use single measures (number of bank branches, ownership of a bank account, ratio of credits or deposits to gross domestic product [GDP], etc.). Second, by focussing on UfM countries, the study covers a region that includes both large developed and small developing economies that are connected via financial and trade ties, whilst previous studies generally give global evidence from an international sample with little or no economic ties. Third, splitting the sample by country income groups, the paper presents a more comprehensive representation of the cross-country variation in financial inclusion levels between high- and middle-income economies for this region.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1026-4116

Keywords

Article
Publication date: 15 December 2020

Krishna Singh

Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) launched in the year 2006, with the pursuit of the objective of removing poverty and unemployment and thus…

Abstract

Purpose

Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) launched in the year 2006, with the pursuit of the objective of removing poverty and unemployment and thus address the issue of financial inclusion. The performance of the programme across the states in India has not been uniform. The purpose of this study is to focus on the financial inclusiveness features associated with MGNREGS program across the selected districts in West Bengal in the years of recent past.

Design/methodology/approach

In this study, financial inclusion index has been developed by consideration of four indicators with the help of principal component method. Fixed effect regression model has been applied to explain the impact of relevant determinants on financial inclusion index.

Findings

It is observed that out of 19 districts, seven districts registered an increase in the value of the financial inclusion index in the year 2019 compared to that in the year 2013. The empirical analysis for identifying the determinants of overall inclusion reveals that factors like households having active job card, utilization of fund, amount of labour cost and number of works have significant influence on financial inclusion.

Originality/value

The study widely discussed how the scheme was helping in promoting financial inclusion by providing wage payment through banks and post offices accounts. The author has also tried to highlight some of the difficulties in accelerating the speed of financial inclusion when banks and post offices are used as a means for wage payment and finally provide remedial measures that could be taken to tackle these problems.

Details

International Journal of Social Economics, vol. 48 no. 1
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 8 August 2016

Priyanka Yadav and Anil Kumar Sharma

The purpose of this paper is to combine the critical parameters used to study financial inclusion into a composite index. The idea is to rank Indian states and union territories…

1782

Abstract

Purpose

The purpose of this paper is to combine the critical parameters used to study financial inclusion into a composite index. The idea is to rank Indian states and union territories (UTs) on the basis of this index, determine change in ranks during 2011 to 2014 and identify factors affecting high/low scores on the index.

Design/methodology/approach

Data for the study were collected from secondary sources published by Reserve Bank of India (RBI) and Central Statistical Organization. Applying technique of order preference by similarity to ideal solution (TOPSIS), a composite multi-dimensional index of financial inclusion (IFI) has been built by using three broad parameters of penetration, availability and usage of banking services. Factors significantly influencing scores of states/UTs on IFI were identified using multiple regression analysis.

Findings

The value of financial inclusion for India on composite IFI has increased by 0.045 points during the study period. Share of agriculture to state gross domestic product, literacy ratio, population density, infrastructure development and farmer suicides are significant factors affecting financial inclusion.

Practical implications

The multi-dimensional IFI is a useful tool to measure financial inclusion using several parameters for various states/regions. The index can also be used to compare the performance of states/regions over same/different periods.

Originality/value

This paper is unique in its attempt to construct multi-dimensional IFI for Indian states/UTs by applying TOPSIS. It will prove useful for future researchers by combining several aspects of financial inclusion into single index.

Details

Humanomics, vol. 32 no. 3
Type: Research Article
ISSN: 0828-8666

Keywords

Article
Publication date: 30 March 2021

Ambrose Nnaemeka Omeje, Augustine Jideofor Mba, Michael Okike Ugwu, Joseph Amuka and Perpetual Ngozi Agamah

The study examined the penetration of financial inclusion in the agricultural sector, using small-scale farmers in Enugu State, Nigeria, as evidence.

Abstract

Purpose

The study examined the penetration of financial inclusion in the agricultural sector, using small-scale farmers in Enugu State, Nigeria, as evidence.

Design/methodology/approach

The study utilized survey data generated from 425 questionnaires administered to small-scale farmers in both rural and urban locations in Enugu State. The study applied the adequacy gap, timeliness gap and penetration gap indices to measure the penetration of financial inclusion among the small-scale farmers in Enugu State.

Findings

It was found that different lending agencies, except for some cooperative societies, were unable to meet the credit needs of small-scale farmers in Enugu State as shown by the adequacy gap index. The timeliness gap index revealed the existence of time gap in the credit receipt of small-scale farmers given that agriculture is rain-fed in Enugu. The penetration gap index indicated that there is gap in the penetration of agricultural credit grants to small-scale farmers in Enugu State, showing a shallow penetration of financial inclusion in agricultural sector.

Research limitations/implications

The research is limited in scope as a result of data and the desire to study small-scale farmers in Enugu State, Nigeria.

Practical implications

The study recommended among others that government should encourage cooperatives more to meet credit needs of farmers in order to raise the level of financial inclusion penetration.

Originality/value

To the best of the authors' knowledge, this is the only study that examines the penetration of financial inclusion among small-scale farmers in Enugu State, Nigeria. This study contributes to the growing literature on financial inclusion in the agricultural sector as there is dearth of literature in this study area.

Article
Publication date: 18 January 2024

Rajalaxmi Singh and Hrushikesh Mallick

The aim of the paper is to examine the status and determinants of financial inclusion in India by using the recent micro-level survey data.

Abstract

Purpose

The aim of the paper is to examine the status and determinants of financial inclusion in India by using the recent micro-level survey data.

Design/methodology/approach

The authors construct a multidimensional financial inclusion index to measure the status of financial inclusion in the selected 17 states of India. Subsequently, the authors use the probit model estimation to examine the determinants of all financial inclusion indicators.

Findings

The authors find that southern and north-eastern states perform better in the overall financial inclusion index. In contrast, states like Odisha, Madhya Pradesh, Chhattisgarh, Rajasthan and Uttar Pradesh lag behind. The estimated result shows that the probability of being financially included is higher among urban, richer, educated and salaried individuals. Further, the findings indicate the lower penetration of bank branches and ATMs in the rural parts of the country.

Originality/value

While numerous studies have explored financial inclusion from a macro-level perspective, there exists a notable gap in the literature at the micro-level. This paper aims to address this gap and contributes to the existing literature in two ways. Firstly, it uses the recent micro-level survey data to construct a multidimensional financial inclusion index for the selected Indian states. Secondly, it examines individual-level attributes as the determining factors of financial inclusion, which has been overlooked in India.

Peer review

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-03-2023-0162

Details

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

Keywords

Article
Publication date: 9 May 2022

Theresia Anita Christiani and Chryssantus Kastowo

This study aims to provide and find an alternative solution to achieving literacy indexes and financial inclusion that exceeded the target in 2019.

Abstract

Purpose

This study aims to provide and find an alternative solution to achieving literacy indexes and financial inclusion that exceeded the target in 2019.

Design/methodology/approach

This research uses a normative research type. Secondary data becomes the primary data and uses the method of qualitative data analysis.

Findings

The results showed that public literacy and financial institutions’ inclusion were dependent on public trust in financial institutions. The Financial Services Authorities’ (FSA) arrangement’s weakness lies in the limited scope of the FSA’s authority in carrying out legal actions against unlicensed financial institutions and the low critical power of the community in choosing a credible financial institution.

Research limitations/implications

Based on the research findings, results are expected to have implications for the concept of FSA’s authority.

Practical implications

Based on the research findings, results are expected to have implications for expanding the FSA’s authority to conduct oversight of financial institutions so that the high literacy and financial inclusion of the public can achieve public welfare.

Social implications

The research implication for the community is that the results of this study find weaknesses in the financial literacy and inclusion policies to find the causes of the problems and find solutions to these problems. The practical research implications are for policymakers; research results can be used as a basis for determining solutions to problems in regulations. The results of this study can also have implications for the development of a boy of knowledge in the field of business economic law, especially economic law.

Originality/value

To the best of the authors’ knowledge, there are no researches that have similarities with this paper.

Details

foresight, vol. 25 no. 3
Type: Research Article
ISSN: 1463-6689

Keywords

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 countries really…

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.

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 and…

1774

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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