Triggers and Barriers of Financial Inclusion: A Country-Wise Analysis

Abstract

The objective of this study was twofold. The first goal was to construct a composite multi-dimensional index for financial inclusion using two stage principal component analysis for 91 countries for two benchmark years, 2011 and 2014 which includes both supply and demand side factors and compare the rank mobility using the World Bank Findex database. The second goal was to track the binding determinants of financial inclusion using a panel fixed effects model. A panel ordered probit model was used to judge the extent of causality between growth, sectoral share, female workforce participation, poverty reduction with different levels of financial inclusion. The middleand low-income countries can reach their potential if the sources of barriers have been tracked efficiently as this is the main constraint for an inclusive financial system. Toreduce the multidimensional poverty through endogenous stimulus of the poor population in South-Asian, Sub-Saharan and few Latin American countries, it is essential to reinforce the provision of financial resources for the working-age female population and to improve the affordability and accessibility of inclusive investment for rural populations. Contribution/ Originality: The paper proposes a new estimation methodology for constructing a multidimensional financial inclusion index considering both demand and supply side parameters. The study explored the causality of financial inclusion with other macroeconomic variables such as inclusive growth and financial stability, employment, poverty using the panel ordered probit model.

Does financial inclusion help alleviate household poverty and vulnerability in China?

“…On the other hand, bank accounts are the groundwork for financial Inclusion [39]. Moreover, insurance can provide risk protection and enhance the economic effects of loan services [40].…”

Controlling corruption in African countries: innovation, financial inclusion and access to education as alternative measures

“…For example, salary banking greatly reduces ghost employees and corruption (Ajide, 2020(Ajide, , 2021. Low levels of education are a major barrier to financial inclusion and innovation in Africa and other developing countries (Mukherjee and Sood, 2020). General education and financial education contribute to better sustainability in the use of financial products and services (Jungo et al, 2021a).…”

The Effect of Financial Inclusion and Competitiveness on Financial Stability: Why Financial Regulation Matters in Developing Countries?

“…First, although these groups of countries are located in different geographic regions, many of them have similar economic and social characteristics, namely strong heterogeneity in economic growth, excess natural resources, low levels of economic development, strong population growth, high rates of poverty, and unemployment (Jungo et al 2021;De la Torre et al 2018). Second, in both regions, a considerable number of adults remain without access to financial services and products (Demirgüç-Kunt et al 2018;Mukherjee and Sood 2020). Third, the economic organization system in the two regions is rather dualistic and there is a strong interaction between the informal and the formal system (Durango-Gutiérrez et al 2021;Fromentin 2018;Gries et al 2011).…”

“…Financial inclusion is a policy goal present on almost every agenda, especially in emerging economies and developing countries (Demirgüç-Kunt et al 2018;Mukherjee and Sood 2020). Access to a bank account is the main way forward in achieving financial inclusion (Demirgüç-Kunt et al 2018).…”