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Is Financial Inclusion Cause or Outcome? A State-Wise Assessment in India

Author

Listed:
  • Shrabani Mukherjee

    (Assistant Professor, Madras School of Economics)

  • Subhadri Sankar Mallik

    (Madras School of Economics)

Abstract

Financial inclusion is considered as cause as well as outcome of inclusive growth. This study tries to construct a comprehensive measure of financial inclusion and evaluate the extent of financial inclusion for 20 major states in India for the period from 2008 to 2012 using principal component Analysis. Further, it intends to examine the extent of causal relationship between financial inclusion and macroeconomic variables such as agricultural growth, industrial growth and progress in elementary and secondary education for the states. A Panel data analysis claimed strong one way causality between financial inclusion and agricultural growth and elementary education. However, reverse causality which is acclaimed by the theory, doesn’t occur.

Suggested Citation

  • Shrabani Mukherjee & Subhadri Sankar Mallik, 2015. "Is Financial Inclusion Cause or Outcome? A State-Wise Assessment in India," Working Papers 2015-132, Madras School of Economics,Chennai,India.
    • Handle: RePEc:mad:wpaper:2015-132
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    File URL: http://www.mse.ac.in/wp-content/uploads/2016/09/Working-Paper-132.pdf
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    More about this item

    Keywords

    Financial Inclusion; PCA Analysis; Random effect model; Ordered Probit Random effect model;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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