Understanding Financial Inclusion and Its Socio-economic Determinants: Evidence from India

Abstract

In recent years, financial inclusion has garnered widespread attention among academics and policymakers across developing countries, including India. This article aims to understand financial inclusion and analyse the factors that determine it using micro-level data from the Financial Inclusion Insight Survey 2018 for India. It applies a probit model to explore the influence of demographic and socio-economic factors on financial inclusion. The empirical findings of this study show that the probability of being financially included increases with education, income, property ownership, government welfare benefits, financial literacy and having a PAN card. Conversely, this study also reveals that females, individuals with lower socio-economic status, illiterate, those with no formal education, unemployed and homemakers are less likely to achieve financial inclusion. Hence, targeted policies and interventions are needed to overcome disparities and ensure improvement in the financial inclusion status for marginalised groups.