Financial inclusion, economic growth, and poverty alleviation: evidence from eastern Indonesia

Erlando, Angga; Riyanto, Feri Dwi; Someya, Masakazu

doi:10.1016/j.heliyon.2020.e05235

Cited by 179 publications

(163 citation statements)

References 52 publications

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“…The answers to these questions only represent the usage dimension of financial inclusion, which represents how well the people of one particular household know about finance. Many factors influence this financial awareness, and the dominant factors are the level of education and the subtlety of financial services [ 58 , 59 ]. Moreover, financial inclusion is a broad concept, and as such, it requires multidimensional assessments [ 60 , 61 ].…”

Section: Methodology and Datamentioning

confidence: 99%

The convergence of financial inclusion across provinces in Vietnam: A novel approach

Nguyen

Hồ

et al. 2021

PLoS ONE

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Financial inclusion has generally been considered an effective mechanism to support economic growth and reduce Vietnam’s poverty for the last decade. While the importance of financial inclusion to economic growth or macroeconomic stability has been widely examined, it appears that the degree of financial inclusion across Vietnam has not attracted attention from academics and policymakers. In particular, a convergence of financial inclusion across provinces in Vietnam has never been examined. This paper is conducted to examine the static and dynamic distributions of financial inclusion across provinces in Vietnam. The latest three biennial surveys from 2014 to 2018 and a novel approach known as the dynamic kernel density function are used in this study. Our results indicate that Vietnam’s economic growth and development over the 2014–2018 period is relatively inclusive. The evidence also demonstrates that households provided with access to multiple sources of finance depend significantly on the provincial level of income. We also find that provinces located in the national key economic regions, including (i) the Northern region and (ii) the Southern region, appear to achieve a higher degree of financial inclusiveness. Our findings also confirm the catching-up from the financially disadvantaged provinces to financially advantaged provinces locating within the key economic regions. We argue that understanding the asymmetric effect of economic growth on financial inclusion will be helpful for the Vietnamese government in formulating and implementing economic policies promptly to secure the sustainable and inclusive goals of economic growth and development in the future.

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Section: Methodology and Datamentioning

confidence: 99%

The convergence of financial inclusion across provinces in Vietnam: A novel approach

Nguyen

Hồ

et al. 2021

PLoS ONE

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“…The empirical results indicated that financial inclusion reduces income inequality but has no impact on poverty in the MENA region. Erlando et al (2020) discussed how financial inclusion contributes to economic growth and the reduction of poverty in Indonesia using the vector autoregression model (VAR) and the panel vector autoregression model (PVAR). The results showed a two-way causality between financial inclusion, economic growth and poverty.…”

Section: Literature Reviewmentioning

confidence: 99%

Financial inclusion, mobile banking, informal finance and financial exclusion: micro-level evidence from Morocco

Ezzahid

Elouaourti

2021

IJSE

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PurposeThis 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/approachFirst, 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.FindingsFirst, 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/implicationsThe 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 implicationsThis 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 implicationsFor society, this study provides considerable insight about the segments of population that are financially excluded and the main reasons for their exclusion.Originality/valueThis 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.

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“…Although substantial reductions in poverty have taken place in Indonesia (Muryani & Esquivias, 2021;Purwono et al, 2021;Yusuf & Sumner, 2015), the Gini ratio (a measure of income or wealth inequality within a nation) has deteriorated over the past two decades (van Leeuwen & Földvári, 2016). Inequality in the country remains substantially significant (Erlando et al, 2020). Government efforts to promote more rapid economic growth, attract more FDI, and create more sophisticated jobs have been more active than ever (Das & Sethi, 2020;Esquivias & Harianto, 2020).…”

Section: Introductionmentioning

confidence: 99%

Dynamics of Income Inequality, Investment, and Unemployment in Indonesia

Esquivias

Sethi

Iswanti

2021

JPSS

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This paper examines the effect of per capita income, investment, and unemployment on income inequality in Indonesia from 2011 to 2019. We use both static and dynamic panel data approaches covering 34 provinces in Indonesia. The results support the Kuznets hypothesis, whereby a more significant per capita income growth is associated with more substantial income inequality in a short period; however, this decreases over time (sign change). Furthermore, a larger real per capita income is associated with lower inequality when accompanied by progress in human capital. Alternatively, foreign direct investment (FDI) and infrastructure expenditure positively relate to income inequality, although FDI eventually helps lower inequality. Similarly, increases in domestic private investment can help to reduce income disparity. Meanwhile, unemployment is negatively associated with income inequality, suggesting that better jobs (rather than more jobs per se) are needed to improve income distribution in the country. Although per capita income, investment, and employment have improved substantially and helped Indonesia raise overall income, economic progress does not seem to have been inclusive. We argue that the panel dynamic model helps to capture the persistence effect of income distribution, suggesting a more precise estimation of income inequality issues than static models.

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Financial inclusion, economic growth, and poverty alleviation: evidence from eastern Indonesia

Cited by 179 publications

References 52 publications

The convergence of financial inclusion across provinces in Vietnam: A novel approach

The convergence of financial inclusion across provinces in Vietnam: A novel approach

Financial inclusion, mobile banking, informal finance and financial exclusion: micro-level evidence from Morocco

Dynamics of Income Inequality, Investment, and Unemployment in Indonesia

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