Financial Inclusion and Human Capital in Developing Asia: the Australian connection

Abstract

The Australian government as part of its aid programme allocates large funds to improve financial inclusion in the developing countries. This, however, does not take into account low educational levels in these countries. The existing literature on financial inclusion also treats the issue of financial inclusion as mainly supply centric and does not take cognizance of the fact that poor human development and high illiteracy levels in developing economies may prevent a large section of the population from benefitting from financial inclusion efforts due to low awareness and comprehension of the financial services. In this study by using a detailed three stage methodological approach we examine the relationship between financial development and human capital in 21 countries of developing Asia. The results of our study show that a significant negative relationship exists between financial development proxied by M2/GDP and pupil-teacher ratio and strong positive relationship exists between physical access to banks and expected years of schooling. Further, our financial development and educational development indices also show no clear pattern in the selected countries financial and educational development.

Financial inclusion in Colombia: A scoping literature review

“…Several studies associate financial inclusion with economic development, as it incorporates segments of the population that were previously excluded from the financial system, hence reducing poverty (Anzoategui et al, 2014;Arora, 2012;Chakravarty & Pal, 2013;Cnaan et al, 2011;Duncombe, 2012;García Cediel, 2013;Lusardi & Mitchell, 2014;Mishra & Singh Bisht, 2013;Sarma & Pais, 2011;Soederberg, 2013). Others assert that financial exclusion is a key obstacle to sustainable economic development (Beck & Demirguc-Kunt, 2008;Gómez-Barroso & Marban-Flores, 2013;Honohan, 2008;Hudon, 2008;Marron, 2013).…”

“…Financial education is considered essential to achieving and creating financial inclusion. It is conceived as a tool through which individuals develop the values, knowledge, and skills needed to make responsible financial decisions requiring the application of basic financial concepts and understanding (Arora, 2012;Duncombe, 2012;Figart, 2013;Horska et al, 2013;Lusardi & Mitchell, 2014). Additionally, financial education is closely related to financial exclusion.…”

Determinants of Islamic Financial Exclusion in Indonesia

“…For example, Bontis (1998) concludes that human capital is an integral part of structural capital, which creates, acquires, and employs consumer capital to achieve organisational objectives. In contrast, weak human capital and high financial illiteracy might prevent a large number of populations from participating in financial products and services (Arora, 2012). Ellis, Lemma and Rud (2010) also affirm that human capital significantly contributes to the broader access of financial products and services, image, and delivery services.…”

Major Determinants of Financial Inclusion: State-Level Evidences from India

“…Studies like Calderón and Liu (2003), King and Levine (1993), Levine (2005), Patrick (1972) underlines that financial services and financial development fuel economic growth by escalating the rate of capital buildup and by enhancing the effectiveness with which economies use that capital in the current period as well as in the future. Similarly, Arora (2011), Gupta et al (2014) and Kuri and Laha (2017) have commented human development is positively connected to financial inclusion. Sarma and Pais (2011) opted for regression analysis using data for 49 countries on income, inequality, literacy, urbanization, physical infrastructure indicated by length of roads, telephone and usage of internet, non-performing asset, capital asset ratio, interest rate, government, foreign ownership in banking sector and financial inclusion.…”