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Measuring Financial Inclusion: A Multidimensional Index

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  • Noelia Camara
  • David Tuesta

Abstract

We rely on demand and supply-side information to measure the extent of financial inclusion at country level for eighty-two developed and less-developed countries. We postulate that the degree of financial inclusion is determined by three dimensions: usage, barriers and access to financial inclusion. Weights assigned to the dimensions are determined endogenously by employing a two-stage Principal Component Analysis. Our composite index offers a comprehensive measure of the degree of financial inclusion, easy to understand and compute.

Suggested Citation

  • Noelia Camara & David Tuesta, 2014. "Measuring Financial Inclusion: A Multidimensional Index," Working Papers 1426, BBVA Bank, Economic Research Department.
    • Handle: RePEc:bbv:wpaper:1426
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    financial inclusion; Principal Component Analysis; inclusion barriers;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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