Proposed Framework for Measuring a Bank’s Progress in Implementing Financial Inclusion: An Exploratory Study in Egypt

This study presents a proposed multidimensional framework for measuring the level of application of financial inclusion (FI) at the individual bank level based on international expertise and experience in the field of FI application by relying on a balanced scorecard, clarifying the advantages and disadvantages of FI for banks, and reviewing previous attempts to build an indicator to measure FI. After reviewing the literature and conducting a series of interviews with bank managers in Egypt, this study concludes that bank application of FI has many benefits, such as diversifying banking assets, attracting new customers, stabilizing deposits, and reducing liquidity risks as well as providing a large database to banks, which can contribute to the possibility of introducing new products that can satisfy customer needs and building credit evaluation models to facilitate access to financing. However, the application of FI may have negative effects on banks, as providing basic financial services at zero cost (or costs lower than actual bank costs) may lead to a low level of welfare for financial service users and providers. At the same time, service providers may refrain from providing financial services when they have little incentive to do so. In addition, this study finds that all the indicators for measuring FI are used at the state level, and no indicator exists for measuring FI at the individual bank level. There-fore, this study proposes a multidimensional framework for measuring the level of application of FI at the bank level based on four perspectives of a balanced scorecard to contribute to the development of bank performance by providing appropriate and accurate information that can help the bank management in identifying shortcomings and weaknesses as well as opportunities for improvement and strengths, which can be exploited to improve future performance.