Measuring financial inclusion: a composite FI index for the developing countries

Nguyen, Thi Truc Huong

doi:10.1108/jed-03-2020-0027

Cited by 86 publications

(67 citation statements)

References 32 publications

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“…Through the PCA method, eigenvalues of each sub-index are calculated, and the latent variables: access (D i A ) and usage (D i U ), are estimated as shown below in Table 9. The highest eigenvalue of the components retains more standardized variance, among others, and an eigenvalue greater than 1 is considered for the analysis (Nguyen, 2020). Table 9 shows the results of the firststage PCA.…”

Section: First-stage Pca Resultsmentioning

confidence: 99%

The Impact of Financial Inclusion on Unemployment Rate in Developing Countries

Mehry

Ashraf

Elsherif

2021

IJEFI

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Financial inclusion has become the focus of economic policymaking worldwide. Increasing the accessibility of the weaker group of the society to formal financial services would not only serve at the individual level but will also benefit at the national level. This study aims to initially construct a new financial inclusion index for 43 developing countries based on a multidimensional approach, using Principal Component Analysis (PCA), using three dimensions; access to, usage of, and quality of financial services. Secondly, a dynamic two-step system, Generalized Method of Moments (GMM), is applied to empirically assess the impact of financial inclusion on the unemployment rate of 35 developing countries for the sample period from 2009 to 2018. The study established that financial inclusion has an impact on decreasing the unemployment rate in developing countries. The empirical findings suggest that an increase in the level of financial inclusion in developing countries decreases their unemployment rate. Moreover, the level of education, inflation rate, and economic growth have a significant negative impact on the unemployment rate. On the other hand, panel Granger Causality test was employed and indicated that there is a bi-directional causality between financial inclusion and unemployment rate.

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Section: First-stage Pca Resultsmentioning

confidence: 99%

The Impact of Financial Inclusion on Unemployment Rate in Developing Countries

Mehry

Ashraf

Elsherif

2021

IJEFI

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“…ATMs offered significant benefits to banks by providing convenience, reducing the workload, and minimizing transaction costs. Similar to prior research methodologies [43,77,78], two measurements to cover the services of the banking sector, namely outstanding deposits and outstanding loans (as a % of GDP), were utilized to cover deposits and credits, respectively.…”

Section: Data and Variablesmentioning

confidence: 99%

Financial Inclusion’s Role in Economic Growth and Human Capital in South Asia: An Econometric Approach

2021

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Many of the 2030 sustainable development goals have targeted the strengthening of financial inclusion, which is currently a key policy priority on the agendas of most governments in developing nations. The process of facilitating banking and financial services for individuals is called financial inclusion, which supports growth and the broader development goals of an economy. Although economic growth and human capital development indices have been analyzed using different proxy variables, insufficient attention has been paid to constructing a composite index for measuring this to achieve greater sustainability in terms of the economy, communities, and the environment. This study sought to address this gap using secondary data from eight countries in South Asia from 2004 to 2018. A financial inclusion index was developed through principal component analysis using an econometric approach of panel data with vector error correction models and a Granger causality test. As per the results of the study, financial inclusion has a long-run impact on human capital development in South Asian countries, whereas it has a short-run positive impact on economic growth. Domestic credits to the private sector also impact the short-run growth and human capital development in the economy. This ensures the confidence of vulnerable communities in their economy, as well as information management, and allows for quality enhancements of transactions with fewer environmental impacts. Government intervention to improve access to financial services, including ATMs and commercial banking, is one policy allowing digital finance to accelerate the achievement of sustainable development goals in South Asian countries.

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“…The highest eigenvalue of the components retains more standardized variance, among others, and an eigenvalue greater than 1 is considered for the Table 6. 10 See Table 5. analysis (Nguyen, 2020). Table 8 shows the results of the first-stage PCA.…”

Section: First-stage Pca Resultsmentioning

confidence: 99%

Assessing the Impact of Financial Inclusion on Inflation Rate in Developing Countries

Bourainy¹,

Ashraf²,

Sherif³

2021

JSS

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Interest in promoting financial inclusion has increased dramatically in recent years all over the world. The aim of this study is to empirically assess the impact of financial inclusion on the inflation rate in 37 developing countries for a period of 10 years from 2009 to 2018. Initially, Principal Component Analysis (PCA) has been utilized to construct a new multidimensional Financial Inclusion Index (FII) using three dimensions; access, usage, and quality of financial services. Next, 2 step system, Generalized Method of Moments (GMM) was applied to assess the impact of financial inclusion on the inflation rate empirically. The study established that an increased level of financial inclusion has an impact on decreasing the inflation rate in developing countries. It was also found that interest r and official reserves have a significant positive impact on inflation rate. These findings recommend that the policymakers in developing countries should consider financial inclusion as a tool for decreasing the inflation rate and accordingly boost the level of financial inclusion in their countries. Broadening financial inclusion to the informal sector and the rural areas could help in promoting the status of financial inclusion in developing countries.

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Measuring financial inclusion: a composite FI index for the developing countries

Cited by 86 publications

References 32 publications

The Impact of Financial Inclusion on Unemployment Rate in Developing Countries

The Impact of Financial Inclusion on Unemployment Rate in Developing Countries

Financial Inclusion’s Role in Economic Growth and Human Capital in South Asia: An Econometric Approach

Assessing the Impact of Financial Inclusion on Inflation Rate in Developing Countries

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