Measuring financial inclusion in developing economies: a multidimensional index / Nur Amirah Borhan, Ruhaini Muda and Saadiah Mohamad

Borhan, Nur Amirah and Muda, Ruhaini and Mohamad, Saadiah (2021) Measuring financial inclusion in developing economies: a multidimensional index / Nur Amirah Borhan, Ruhaini Muda and Saadiah Mohamad. Asia-Pacific Management Accounting Journal (APMAJ), 16 (3): 26. pp. 237-262. ISSN 2550-1631

Abstract

Financial inclusion is a major policy concern especially in developing economies. However, an established measure of financial inclusion is still absent. This paper aims to fill this gap by measuring and examining the level of financial inclusion in 66 developing economies. A Financial Inclusion Index (FII) was constructed, incorporating five indicators (ATM, Bank, Other Financial Institutions, Deposits and Loans) for 2013 until 2019. Twostaged Factor Analysis was employed for weights assignment. The results showed that the average level of financial inclusion in developing economies was low but with significant variation among group of countries. A lower level of financial inclusion was observed among the African countries as well as the low-income and lower-middle income countries. The paper also analysed the relationship between financial inclusion and economic development. The findings showed that more developed economies had higher income and thus, higher financial inclusion. While the index is valid and reliable to be used for comparison among developing economies, the study was unable to include indicators of mobile and internet banking due to data constraints. Despite this caveat, the findings of this study will be useful for policymakers in shaping financial inclusion policies.

Metadata

Item Type: Article
Creators:
Creators
Email / ID Num.
Borhan, Nur Amirah
UNSPECIFIED
Muda, Ruhaini
UNSPECIFIED
Mohamad, Saadiah
UNSPECIFIED
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
Divisions: Universiti Teknologi MARA, Shah Alam > Accounting Research Institute (ARI)
Journal or Publication Title: Asia-Pacific Management Accounting Journal (APMAJ)
UiTM Journal Collections: UiTM Journal > Asia-Pacific Management Accounting Journal (APMAJ)
ISSN: 2550-1631
Volume: 16
Number: 3
Page Range: pp. 237-262
Keywords: financial inclusion, financial inclusion index, economic development
Date: December 2021
URI: https://ir.uitm.edu.my/id/eprint/56532
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