Financial Inclusion: A Critical Assessment of its Concepts and Measurement

Abstract

In April 1965, the Reserve Bank liberalized branch-licensing norms and also decided to focus on rural areas. The eleventh five year plan (2007-12) emphasized inclusive growth that is when financial inclusion started getting more prominent position in the policy framework. Wide range of literatures suggests that inclusive financial system is imperative for economic growth and sustainable development which can be achieved through financial inclusion. The definition of financial inclusion is varied but most of the literature zeroed down to use of basic banking services like deposits, loans/micro-finance, payment services, money transfer, insurance, financial literacy etc. So it is essential to measure financial inclusion from supply and demand side to find out the reason that act as an detriemental determinant in the pocess of achieving financial inclusion.

Banking technology and cashless economy in selected Sub-Saharan African countries: does education matter?

“…Insurance service is made available to all insurable persons and firms and also that savings and payment services are made available to everyone (Osei-Assibey, 2015). While accessing the concept of financial inclusion, Singh and Roy (2015) noted that there is the place of financial exclusion, which focuses on the opposite of financial inclusion whether this is done voluntarily or involuntarily. According to Jakši c and Marinc (2019), financial exclusion could occur for a lot of reasons, which include ignorance of the customer, lack of financial literacy, high transaction cost, inconvenience and the fact that such products or services may not be affordable (Aderemi Adeyemo et al, 2020;Jumba and Wephukhulu, 2019).…”

Linkage Between Self-Control, Financial Innovations and Financial Inclusion. A Moderated Mediation Analysis Across Levels of Financial Literacy (The case of owners of Microenterprise in Kenya)

“…Behavioral finance theory recognizes the impact of psychological or behavioral factors (BF) such as risk aversion, overconfidence, imitation, and self-control among others biases on financial decisions [11], [12], [13], [14]. A growing number of studies on users of financial services also referred to as consumer finance has focused on the behavioral biases in their quest to understand their role in financial decisionmaking.…”

“…Some studies have associated the behavioral biases with sub-optimal financial decision-making, for example, consumers' preference for materialism may lead to higher indebtedness, as is the case with lack of self-control, an indicator of present biasness reflected in form of compulsivity and impulsiveness with severe detrimental effects such as high indebtedness and low accumulation of wealth [15], [16], [17]. On the contrary, positive BF such as possession of self-control, confidence in the use of financial information, deliberate thinking, optimism, willingness to take informed risks have been suggested to lead to optimal usage of FS [11], [14], [18], [19]. However, studies that recognize BF on commonly used financial services, a departure from assets traded in securities markets as used in earlier behavioral finance studies, are at infancy stage hence the need to contribute to knowledge growth [17], [20], [21], [22].…”

“…The middle line represents the conditional indirect effects at financial literacy mean value of 3.0666 and standard deviation (SD) of 1.08767. The impact of self-control among other behavioral factors on utilization of diverse forms of formal financial services (financial inclusion) continues to gain empirical interest from scholars and experts [11], [14], [36], [51], [67]. This study formulated a conditional indirect effect model to examine whether self-control would be related to financial inclusion via financial innovations and whether financial literacy would moderate the relationship.…”

Primary school enrolment rate, completion rate and gender balancing in Nigeria; the financial inclusion perspective

“…Financial inclusion enhances access and usage of funds in a timely manner. It also provides adequate credit as of when needed by the downtrodden in the society at an affordable cost the part of the society not able to access credit on time and other financial services from the formal financial institutions are excluded creating concerns for policymakers (Singh and Roy, 2015). The populace financially excluded has brought great social-economic challenges within the world which different international financial institutions, policymakers and government have tried to tackle.…”