IDEAS home Printed from https://ideas.repec.org/a/dbs/ijabfi/v3y2024i2p36-48id167.html
   My bibliography  Save this article

Derivation of weight for measuring financial inclusion index using a non-parametric analysis approach: A study based on Bihar

Author

Listed:
  • Prashant Ranjan
  • Akanksha Chaurasia

Abstract

To address the criticism of arbitrary weight selection in current approaches, this paper generates a composite Financial Inclusion (FI) Index to evaluate financial inclusion across 38 districts in Bihar, India, for the financial year 2020–2021. Financial inclusion is assessed through four dimensions: availability, accessibility, awareness, and usage of financial services, incorporating novel indicators such as training programs organized, persons trained, Bank Mitra engaged, and amount accumulated by Bank Mitra. A two-stage Data Envelopment Analysis (DEA) is employed to derive data-driven weights, supplemented by a comparison with the United Nations Development Programme (UNDP) approach, using data from the state-level banker’s committee report. The DEA results reveal that 27 districts are efficient (score of 1), while Sheikhpura scores the lowest (0.2727). The UNDP approach classifies 19 districts as high FI (>0.6), 16 as medium (0.4–0.6), and 3 as low (<0.4), with Patna achieving the highest score (0.940) and Arwal the lowest (0.377). By pointing out areas needing intervention, the proposed FI Index improves policy development and is simple to compute and comparable throughout regions. This study advances a strong, scientifically sound instrument for measuring financial inclusion with possible use in many spheres.

Suggested Citation

  • Prashant Ranjan & Akanksha Chaurasia, 2024. "Derivation of weight for measuring financial inclusion index using a non-parametric analysis approach: A study based on Bihar," International Journal of Accounting, Business and Finance, Indian Accounting Association, Patna Branch, vol. 3(2), pages 36-48.
    • Handle: RePEc:dbs:ijabfi:v:3:y:2024:i:2:p:36-48:id:167
    as

    Download full text from publisher

    File URL: https://www.ijabf.in/index.php/IJABF/article/view/167
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dilip Ambarkhane & Ardhendu Shekhar Singh & Bhama Venkataramani & Zericho Marak, 2022. "Overcoming barriers to financial inclusion: empirical evidence from India," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 49(9), pages 1302-1323, April.
    2. Mandira Sarma, 2008. "Index of Financial Inclusion," Working Papers id:1575, eSocialSciences.
    3. Ben Lockwood, 2004. "How Robust is the Kearney/Foreign Policy Globalisation Index?," The World Economy, Wiley Blackwell, vol. 27(4), pages 507-523, April.
    4. Ibrahim Bozkurt & Rıfat Karakuş & Melek Yildiz, 2018. "Spatial Determinants of Financial Inclusion over Time," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(8), pages 1474-1504, November.
    5. Mandira Sarma, 2008. "Index of Financial Inclusion," Finance Working Papers 22259, East Asian Bureau of Economic Research.
    6. Mr. Alexander Massara & André Mialou, 2014. "Assessing Countries’ Financial Inclusion Standing - A New Composite Index," IMF Working Papers 2014/036, International Monetary Fund.
    7. William W. Cooper & Lawrence M. Seiford & Kaoru Tone, 2006. "Introduction to Data Envelopment Analysis and Its Uses," Springer Books, Springer, number 978-0-387-29122-2, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ayushi Raichoudhury, 2020. "Major Determinants of Financial Inclusion: State-Level Evidences from India," Vision, , vol. 24(2), pages 151-159, June.
    2. Gupta, Suraksha & Kanungo, Rama Prasad, 2022. "Financial inclusion through digitalisation: Economic viability for the bottom of the pyramid (BOP) segment," Journal of Business Research, Elsevier, vol. 148(C), pages 262-276.
    3. Ngasuko, Tri Achya, 2018. "Peningkatan Keuangan Inklusif di Indonesia melalui Fintech Syariah [Increasing Financial Inclusion Through Syaria Fintech]," MPRA Paper 99180, University Library of Munich, Germany, revised 01 Aug 2018.
    4. Shahid Manzoor Shah & Amjad Ali, 2023. "Macro Dimensions of Financial Inclusion Index and its Status in Developing Countries," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 9(1), pages 1-12, March.
    5. Barine Michael Nwidobie, 2019. "Financial Inclusion Index in Nigeria: An Exploratory Analysis," International Journal of Publication and Social Studies, Asian Economic and Social Society, vol. 4(1), pages 26-36, March.
    6. Giorgio Nuzzo & Stefano Piermattei, 2019. "Measuring financial inclusion in the main euro area countries: the role of electronic cards," Questioni di Economia e Finanza (Occasional Papers) 504, Bank of Italy, Economic Research and International Relations Area.
    7. Noelia Cámara & David Tuesta, 2018. "Measuring financial inclusion: a multidimensional index," IFC Bulletins chapters, in: Bank for International Settlements (ed.), The role of data in supporting financial inclusion policy, volume 47, Bank for International Settlements.
    8. Maëlle Della Peruta, 2015. "Mobile Money Adoption and Financial Inclusion Objectives: A Macroeconomic Approach through a Cluster Analysis," GREDEG Working Papers 2015-49, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    9. Tram, Thi Xuan Huong & Lai, Tien Dinh & Nguyen, Thi Truc Huong, 2023. "Constructing a composite financial inclusion index for developing economies," The Quarterly Review of Economics and Finance, Elsevier, vol. 87(C), pages 257-265.
    10. Murshed, Muntasir & Ahmed, Rizwan & Al-Tal, Raad Mahmoud & Kumpamool, Chamaiporn & Vetchagool, Witchulada & Avarado, Rafael, 2023. "Determinants of financial inclusion in South Asia: The moderating and mediating roles of internal conflict settlement," Research in International Business and Finance, Elsevier, vol. 64(C).
    11. Ozili, Peterson K, 2021. "Measuring financial inclusion and financial exclusion," MPRA Paper 107866, University Library of Munich, Germany.
    12. US Thathsarani & Jianguo Wei & GRSRC Samaraweera, 2021. "Financial Inclusion’s Role in Economic Growth and Human Capital in South Asia: An Econometric Approach," Sustainability, MDPI, vol. 13(8), pages 1-18, April.
    13. Zhaobin Fan & Ruohan Zhang, 2017. "Financial Inclusion, Entry Barriers, and Entrepreneurship: Evidence from China," Sustainability, MDPI, vol. 9(2), pages 1-21, February.
    14. Giorgio Nuzzo & Stefano Piermattei, 2020. "Discussing Measures of Financial Inclusion for the Main Euro Area Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 148(3), pages 765-786, April.
    15. Josephine Ofosu‐Mensah Ababio & Edward Attah‐Botchwey & Eric Osei‐Assibey & Charles Barnor, 2021. "Financial inclusion and human development in frontier countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 42-59, January.
    16. Chandralekha Ghosh & Rimita Hom Chaudhury, 2024. "Ranking of countries based on multi‐dimensional financial inclusion index: A global perspective," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 1345-1377, April.
    17. David Mhlanga & Steven Henry Dunga & Tankiso Moloi, 2020. "Financial Inclusion and Poverty Alleviation among Smallholder Farmers in Zimbabwe," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 8(3), pages 168-182.
    18. Biliqees Ayoola Abdulmumin & Oyebola Fatima Etudaiye-Muhtar & Abdulrasaq Taiye Jimoh & Ola Ridwan Sakariyahu, 2019. "An Investigation into the Level of Financial Inclusion in Sub-Saharan Africa," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 66(1), pages 41-63, March.
    19. Yadava, Anup Kumar & Singh, Bhanu Pratap & Yadav, Vishal, 2021. "Nexus of Financial Inclusion and Economic Growth: Benchmarking the Performance of Indian States," MPRA Paper 108479, University Library of Munich, Germany.
    20. Désiré Avom & Chrysost Bangaké & Hermann Ndoya, 2021. "Measuring financial inclusion in African countries," Economics Bulletin, AccessEcon, vol. 41(3), pages 848-866.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dbs:ijabfi:v:3:y:2024:i:2:p:36-48:id:167. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Indian Accounting Association Patna Branch (email available below). General contact details of provider: https://www.ijabf.in/index.php/IJABF/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.