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Financial inclusion in Turkey: unpacking the provincial inequality and its determinants

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  • Sefa Takmaz
  • Erkam Sarı
  • Sedat Alataş

Abstract

This paper investigates the regional disparity of financial inclusion (FI) and its determinants in Turkey from 2004 to 2020. To this end, we first construct an FI index using the principal component analysis. Then, based on the club convergence approach, we test the existence of convergence to show regional disparities in FI. Finally, we examine the main determinants of provincial disparity using ordered logit models. The convergence results strongly reject the full-panel convergence, indicating a regional disparity in FI. Furthermore, our analyses reveal that financial inclusion positively correlates with population, income, and income inequality, while unemployment hinders inclusion. Overall, our results imply that policies focusing on digital financial services, increasing financial literacy, and reducing unemployment should significantly diminish regional disparities and improve FI.

Suggested Citation

  • Sefa Takmaz & Erkam Sarı & Sedat Alataş, 2024. "Financial inclusion in Turkey: unpacking the provincial inequality and its determinants," Applied Economics Letters, Taylor & Francis Journals, vol. 31(7), pages 661-669, April.
    • Handle: RePEc:taf:apeclt:v:31:y:2024:i:7:p:661-669
    DOI: 10.1080/13504851.2022.2141442
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