Financial inclusion: measurement, spatial effects and influencing factors

ABSTRACT

Using the index of financial inclusion and the World Bank Global Findex database, this study measures the level of financial inclusion across countries. The results reveal a geographical spatial aggregation distribution in which developed European and North American countries enjoy higher levels of financial inclusion than the less developed countries of Africa and most of Asia. Accordingly, our spatial analysis proves our hypothesis and reveals dependence and aggregation effects among countries. Then, we employ spatial econometric research to identify those factors significantly associated with financial inclusion. The results show that an individual’s income, education and use of communications equipment are important factors that explain the level of financial inclusion, while financial depth and banking health status are the main determinants. Building an inclusive financial system is an important means for most countries to achieve the Millennium Development Goals.

KEYWORDS:

• Financial inclusion
• financial inclusion index
• international comparison
• spatial econometrics

JEL CLASSIFICATION:

• G21
• O16
• O50

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Source: The series ‘account at a financial institution (% age 15+)’ in the Global Financial Inclusion Database (Global Findex) from the World Bank

² Due to limited space, we do not list the results for each indicator and dimension.

³ The relationship includes the spatial correlation between close countries and differences between distinct countries.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China: [Grant Number 71303077].