Financial Inclusion and Determinants in South Asian Countries

Abstract

Financial inclusion is considered an essential mediator to achieve economic growth in recent years. The main focus of this study is to construct the financial inclusion index and to explore the determinants of financial inclusion in Pakistan, Bangladesh, and India. Data is collected from InterMedia's financial inclusion insights datasets 2016 that are collected through random sampling. The financial inclusion index is used as a dependent variable that is calculated using levels of access and usage of financial services. Age, gender, education, financial situation, working type and use of mobile phones are used as independent variables. Results of multinomial logistic regression reveals that in South Asian countries educated, male, relatively older, rich and regular employees have a better chance to be financially included. Mobile phone users also prefer high financial inclusion. Developing countries like Pakistan, Bangladesh, and India can attain inclusive growth by increasing the contribution of weaker sections of the population with the mainstream. If weaker sections of the population have easy access to financial services, the economic growth of a country can be enlarged. So policymakers should focus on the financial sector's structural problems and pay attention to create modern financial institutes both in the banking sector and in financial markets.