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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: 16 February 2021

Amenawo Ikpa Offiong, Hodo Bassey Riman, Godwin Bassey James, Anthony Ogar, Emmanuel Ekpenyong Okon and Helen Walter Mboto

The bedrock of growth in education is at the primary/basic education level, hence there is need to ensure that the populace not only enrolls but complete their education…

Abstract

Purpose

The bedrock of growth in education is at the primary/basic education level, hence there is need to ensure that the populace not only enrolls but complete their education as well as maintain gender balancing. Financial inclusion is essential in achieving financial development which if properly tailored should result in economic growth and development. Education is an important development parameter, therefore, the purpose of this study is to assess if financial inclusiveness enhances primary school enrolment, completion and gender balancing.

Design/methodology/approach

In order to ascertain if financial inclusion (financial penetration, access and usage) enhances primary school education (primary school enrolment and completion) and gender balancing (primary school female-to-male ratio), the study employed the vector error correction modeling (VECM) to capture both short- and long-run dynamics of cointegration equations and also, ascertain how the long-run deviations are deemed corrected in the short run.

Findings

The findings of financial inclusion showed a significant positive effect on primary school enrollment but regarding primary school completion rate and female-to-male ratio, the responses to financial inclusion measures showed a completely negative effect. From the foregoing, it is not just sufficient to enroll school children but that they complete their basic primary education, and equally ensure that the males are not favored over the females so as to achieve gender balance literacy in the country.

Originality/value

The study focuses on how financial inclusion engenders admission, graduation and gender balancing in primary school education as the bedrock to formal education in Nigeria.

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: 18 January 2021

Peterson Kitakogelu Ozili

This paper aims to examine whether high levels of financial inclusion is associated with greater financial risk.

Abstract

Purpose

This paper aims to examine whether high levels of financial inclusion is associated with greater financial risk.

Design/methodology/approach

The study uses regression methodology to estimate the effect of financial inclusion on financial risk.

Findings

The findings reveal that higher account ownership is associated with greater financial risk through high non-performing loans and high-cost inefficiency in the financial sector of developed countries, advanced countries and transition economies. Increased use of debit cards, credit cards and digital finance products reduced risk in the financial sector of advanced countries and developed countries but not for transition economies and developing countries. The findings also show that the combined use of digital finance products with increased formal account ownership improves financial sector efficiency in developing countries while the combined use of credit cards with increased formal account ownership reduces insolvency risk and improves financial sector efficiency in developing countries.

Research limitations/implications

The paper offers several implications for policy and financial regulation. It suggests policies that would reduce the financial risk that financial inclusion poses to the financial sector.

Originality/value

The recent interest in financial inclusion and the unintended consequences of policy-driven financial inclusion in some parts of the world is raising concern about the risks that financial inclusion may introduce to the formal financial sector. Little is known about the risks that financial inclusion may pose to the financial sector.

Details

Journal of Financial Regulation and Compliance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1358-1988

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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…

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

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Article
Publication date: 15 December 2020

James Atta Peprah, Isaac Koomson, Joshua Sebu and Chei Bukari

Does financial inclusion matter for productivity among smallholder farmers? The authors answer this question by using the sixth and seventh rounds of the Ghana Living…

Abstract

Purpose

Does financial inclusion matter for productivity among smallholder farmers? The authors answer this question by using the sixth and seventh rounds of the Ghana Living Standard Survey to examine the extent to which financial inclusion affects productivity among smallholder farmers in Ghana.

Design/methodology/approach

The study uses a pooled data of the 6th and 7th rounds of the Ghana Living Standard Survey which are national representative data. The authors model an Instrumental Variable (IV) to correct for endogeneity in financial inclusion and a dominance analysis to examine the effects of access to credit, ownership of savings account and insurance product on farmers' productivity.

Findings

Results from the study indicate that financial inclusion significantly enhances productivity. Moreover, credit, savings and insurance products influence productivity at various degrees. Thus, expanding the scope of financial services (access to credit, savings and insurance) among smallholder farmers is crucial for inclusive finance and sustainable agricultural production.

Practical implications

The findings of the study have implications for financial institutions in the design of financial products that the meet the needs of smallholder farmers.

Originality/value

Several studies have looked at how access to credit influences agricultural productivity in Africa. However, in recent times financial inclusion has been advocated for because it goes beyond mere access to credit. This paper to the best of our knowledge is the first of its kind to examine how financial inclusion could affect agricultural productivity in Ghana.

Details

Agricultural Finance Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0002-1466

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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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Article
Publication date: 10 September 2020

Umar Habibu Umar

This study explores the benefits of business financial inclusion from the Islamic perspective in Nigeria by selecting Kano state as a case study.

Abstract

Purpose

This study explores the benefits of business financial inclusion from the Islamic perspective in Nigeria by selecting Kano state as a case study.

Design/methodology/approach

Primary data were generated through semi-structured interviews with experts who comprised professional accountants/consultants and experienced traders. Thematic analysis was applied to examine the data collected. In addition, observations were made in some selected stores and shops to complement the interview results.

Findings

The study finds that the benefits of business financial inclusion include recordkeeping improvement, reduction of the risks of bad debts, reduction of the risks associated with cash, enhancing business zakāh for poverty alleviation, sales improvement and business growth, getting supports from government and other development organizations and the provision of employment opportunities.

Research limitations/implications

This study is purely qualitative, and, as such, it has some limitations in terms of generalization.

Practical implications

The practical implication of this study is that the use of electronic payment methods, especially point of sales, enhances the business financial inclusion, which consequently maximizes their wealth and contributes to the reduction of poverty to the barest minimum in the society.

Social implications

The social implication of the findings is that businesses that are financially included are in a better position to discharge religious, philanthropic and other benevolent activities, such as zakāh, qard hasan, waqf and sadaqah, for the welfare of the ummah.

Originality/value

The study points out the benefits of financial inclusion not only to businesses but also to other members of the society at large.

Details

Islamic Economic Studies, vol. 28 no. 1
Type: Research Article
ISSN: 1319-1616

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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. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1368-5201

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Article
Publication date: 22 July 2020

Duha Farouq Khmous and Mustafa Besim

This study aims to investigate how the Islamic banking share (percentage of total Islamic banking assets relative to total banking sector assets) and individual…

Abstract

Purpose

This study aims to investigate how the Islamic banking share (percentage of total Islamic banking assets relative to total banking sector assets) and individual characteristics (gender, age, income and education) affect financial inclusion in 14 Middle Eastern and North African (MENA) countries with different income levels.

Design/methodology/approach

This study uses data from the 2014 World Bank Global Findex database to analyze the impact of individual characteristics, Islamic banking share and countries’ developmental levels on financial inclusion and its barriers in MENA countries. The probit estimation method is used for estimations.

Findings

The findings indicate that financial inclusion, particularly in middle-income MENA countries, is lower than the global average. While being male, rich and older positively affects financial inclusion in these countries, education does not. Islamic banking practises also contribute to financial inclusion, especially for individuals with strong religious affiliations. The effect of Islamic banking on financial inclusion is found to be greater in middle-income MENA countries.

Practical implications

Islamic banking institutions could play a greater role in promoting financial inclusion in the MENA region by offering Sharia-compliant products that meet individuals’ needs, matching the specific requirements and status of each country with affordable costs and offering adequate information to customers. Governments should promote more Islamic banking and incentivise investments in technology, which helps expand financial inclusion.

Originality/value

This is the first study to examine the influence of Islamic banking share and countries’ levels of development on financial inclusion in the MENA region.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 13 no. 4
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 14 May 2020

George Okello Candiya Bongomin and Joseph Mpeera Ntayi

Drawing from the argument that mobile money services have a significant potential to provide a wide range of affordable, convenient and secure financial services, there…

Abstract

Purpose

Drawing from the argument that mobile money services have a significant potential to provide a wide range of affordable, convenient and secure financial services, there have been rampant frauds on consumers of financial products over the digital financial platform. Thus, this study aims to establish the mediating effect of digital consumer protection in the relationship between mobile money adoption and usage and financial inclusion with data collected from micro small and medium enterprises (MSMEs) in northern Uganda.

Design/methodology/approach

To achieve the main objective of this study, a research model was developed to test for the mediating effect of digital consumer protection in the relationship between mobile money adoption and usage and financial inclusion. The data were collected from MSMEs and structural equation modelling in partial least square (PLS) combined with bootstrap was applied to analyze and test the hypotheses of this study. The direct and indirect effect of mobile money adoption and usage on financial inclusion was tested through digital consumer protection as a mediator variable.

Findings

The findings from the PLS-structural equation modelling (SEM) showed that mobile money adoption and usage has both direct and indirect effect on financial inclusion. Moreover, financial inclusion is influenced by both mobile money adoption and usage and digital consumer protection.

Research limitations/implications

The study used partial least square (PLS-SEM) combined with bootstrap confidence intervals through a formative approach to establish the mediating effect of the mediator variable. Hence, it ignored the use of covariance-based SEM and the MedGraph programme. Furthermore, data were collected from samples located in Gulu district, northern Uganda and specifically from MSMEs. This limits generalization of the study findings to other population who also use mobile money services.

Practical implications

Promoters of digital financial services, managers of telecommunication companies, and financial inclusion advocates should consider strengthening the existing digital consumer protection laws on the mobile money platform. A collaborative approach between the mobile network operators, financial institutions and regulators should tighten the existing laws against mobile money fraudsters and an efficient mechanism for recourse, compensation and remedy should be set up to benefit the victims of frauds and cybercrime on the Fintech ecosystem.

Originality/value

The current study gives a useful insight into the critical mediating role of digital consumer protection as a cushion for promoting financial inclusion through mobile phones over the Fintech that face great threat and risk from cyber insecurity.

Details

Digital Policy, Regulation and Governance, vol. 22 no. 3
Type: Research Article
ISSN: 2398-5038

Keywords

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