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Demand-side Factors for Financial Inclusion: A Cross-country Empirical Analysis

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  • Rigzin Yangdol
  • Mandira Sarma

Abstract

The importance of an inclusive financial system in the overall growth and economic development of a nation is well recognized. While most studies on financial inclusion use supply-side data, this article presents a demand-side analysis of factors associated with financial inclusion. Making use of a large cross-country data on financial inclusion status and individual characteristics of adult individuals, we econometrically establish that individual characteristics and economic circumstances play very significant role in determining financial inclusion of adult individuals, after taking into account other factors of the country. The article uses three indicators of financial inclusion and several explanatory variables such as country-specific factor (gross domestic product [GDP] per capita), individual characteristics and individual economic circumstances of adult individuals from different countries. We find that in general, being woman, less educated, jobless and poor are negatively associated with financial inclusion of individuals. Enhanced level of education and income, in general, enhances likelihood of financial inclusion. These findings should be taken into account while formulating policies towards promotion of financial inclusion.

Suggested Citation

  • Rigzin Yangdol & Mandira Sarma, 2019. "Demand-side Factors for Financial Inclusion: A Cross-country Empirical Analysis," International Studies, , vol. 56(2-3), pages 163-185, April.
    • Handle: RePEc:sae:intstu:v:56:y:2019:i:2-3:p:163-185
    DOI: 10.1177/0020881719849246
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    References listed on IDEAS

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    5. Asli Demirguc-Kunt & Leora Klapper, 2013. "Measuring Financial Inclusion: Explaining Variation in Use of Financial Services across and within Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 44(1 (Spring), pages 279-340.
    6. Asli Demirguc-Kunt & Leora Klapper, 2013. "Measuring Financial Inclusion: Explaining Variation in Use of Financial Services across and within Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(1 (Spring), pages 279-340.
    7. Honohan, Patrick, 2008. "Cross-country variation in household access to financial services," Journal of Banking & Finance, Elsevier, vol. 32(11), pages 2493-2500, November.
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    Cited by:

    1. Betgilu Oshora & Goshu Desalegn & Eva Gorgenyi-Hegyes & Maria Fekete-Farkas & Zoltan Zeman, 2021. "Determinants of Financial Inclusion in Small and Medium Enterprises: Evidence from Ethiopia," JRFM, MDPI, vol. 14(7), pages 1-19, June.
    2. Shahid Manzoor Shah & Amjad Ali, 2022. "A Survey on Financial Inclusion: Theoretical and Empirical Literature Review," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(4), pages 310-330, December.
    3. Ozili, Peterson K, 2020. "Financial inclusion research around the world: a review," MPRA Paper 101809, University Library of Munich, Germany.

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