Financial Inclusion: New Measurement and Cross-Country Impact Assessment

36 Pages Posted: 8 Jun 2018

See all articles by Cyn-Young Park

Cyn-Young Park

Asian Development Bank

Rogelio Mercado

The SEACEN Centre; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)

Multiple version iconThere are 3 versions of this paper

Date Written: March 2018

Abstract

This paper introduces a new index of financial inclusion for 151 economies using principal component analysis to compute weights for aggregating nine indicators of access, availability, and usage. It then assesses the impact of financial inclusion on poverty and income inequality. The results provide evidence that high- and middle-high-income economies with high financial inclusion have significantly lower poverty, while no such relation exists for middle-low and low-income economies. The nonlinearities in the cross-country determinants and impacts of financial inclusion on poverty and income inequality across income groups are important to choosing the appropriate policies for achieving inclusive growth in different development stages.

Keywords: financial inclusion, income inequality, poverty

JEL Classification: G18, O11, O16

Suggested Citation

Park, Cyn-Young and Mercado, Rogelio, Financial Inclusion: New Measurement and Cross-Country Impact Assessment (March 2018). ADBI Working Paper 539, Available at SSRN: https://ssrn.com/abstract=3188476 or http://dx.doi.org/10.2139/ssrn.3188476

Cyn-Young Park (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines
(632) 632-5473 (Phone)

HOME PAGE: http://www.adb.org

Rogelio Mercado

The SEACEN Centre ( email )

Level 5, Sasana Kijang, Bank Negara Malaysia
2 Jalan Dato’ Onn
Kuala Lumpur, 50480
Malaysia

Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA) ( email )

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