Financial inclusion: a cross country analysis / Muhamad Fakhrul Fikri

This study aims to investigate the determinants of financial inclusion in a cross country analysis. Financial inclusion has been a burning issues in the past decade gaining attentions from both policymakers and private bodies as many bodies realized the importance of it. Previous literatures suggest that financial inclusion are closely related with poverty, income equality and gender equality. However, different researchers use different indicator för financial inclusion resulting inconsistent findings. Therefore, there is a need for a subsequent research to be done in order to determine what variables are significant towards financial inclusion. The dependent data used for this paper is calculated from 4 different variables which are depositors with commercial banks, commercial bank branches, automated teller machines and domestic credit provided by financial sector. These variables are calculated using a formula to obtain a single index which are the Index of Financial Inclusion (IFl) to show a clearer and accurate indicator of financial inclusion. The independent variables are then tested with 4 independent variables which are GDP per capita, rural population, internet users and mobile cellular subscriptions. This research uses data from 40 countries in the year 2015. The country is selected in respect to availability of data using cross sectional method. The data are analysed using E-views 8.0 and are tested according to 5 assumptions which are multicollinearity, heterokedasticity, serial correlation, normality and specifications test. Previous study suggests that only internet users and mobile cellular subscriptions are significant to financial inclusion.