The level of financial inclusion in Ukraine: Measuring access, quality, and usage of financial products and services

Abstract

While financial inclusion is seen as a goal of socio-economic development, there is still no clear understanding of how to measure it. Following this concern, the paper deals with the computation of the financial inclusion index of the Ukrainian economy using an annual dataset spanning from 2008 to 2020 and following the Sarma methodology. The object of the study is a set of indicators of usage, access and quality of financial products and services. The obtained results demonstrate the medium level of financial inclusion. The improvement of financial inclusion is observed in 2012, 2013, 2020 (namely 0.55 – 0.56 in the range of 0 and 1). From 2015 (0.38) till 2018 (0.39), the revealed downward trend affirms that the withdrawal of banks from the market has deteriorated the level of quality and usage of financial products and services. Financial inclusion declined during the cleaning up of the banking system in 2014–2016, just as it did after the global financial crisis in 2009–2010. Despite the development of the payment infrastructure, there is a need to diversify access, increase quality, and quicken the usage of financial products and services due to existing distrust in national financial institutions. Improving financial literacy and consumer protection, and closing regulatory gaps in the non-banking sector are seen as ways to enhance financial inclusion. Thus, financial regulators should establish an upward trend in financial inclusion that will ensure full access to formal financial services and will not adversely affect the stability of financial system.

Sosyal Bilimlerde Akademik Analiz ve Yorumlar

“…Frequently, these services are offered at low or no cost, making them accessible to a broad spectrum of consumers. Traditional banks offer fewer financial products and services than digital banking services (Shapoval, Shkliar, Shpanel-Yukhta, & Gruber, 2021;Stefanelli & Manta, 2023). This includes online brokerage services, peer-to-peer lending platforms, and crowdfunding platforms, which can provide consumers with a broader range of investment opportunities and potentially higher returns.…”

Financial depth-economic growth nexus in Ukraine

“…The country's general level of economic development, measured by the income per capita, can affect the financial depth by increasing the demand for financial products and services and increasing the supply of savings to the population. Countries with more extensive and higher population densities may have higher levels of financial inclusion -deeper financial penetration and lower costs of financial intermediation (e.g., Shapoval et al [34]). The structure of the population by age and employment (for example, the share of the unemployed young and old population) affects the amount of savings and credit schemes [35].…”

Financial Depth-Economic Growth Nexus in Ukraine

“…The country's general level of economic development, measured by the income per capita, can affect the financial depth by increasing the demand for financial products and services and increasing the supply of savings to the population. Countries with more extensive and higher population densities may have higher levels of financial inclusion -deeper financial penetration and lower costs of financial intermediation (e.g., Shapoval et al [34]). The structure of the population by age and employment (for example, the share of the unemployed young and old population) affects the amount of savings and credit schemes [35].…”