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Financial inclusion in India: An axiomatic approach

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  • Chakravarty, Satya R.
  • Pal, Rupayan

Abstract

In this paper we first develop an axiomatic measure of financial inclusion. This measure is readily implementable and useful to determine policy priorities to promote financial inclusion. Next, we demonstrate that supply side data on banking services can be usefully employed to measure financial inclusion. Third, we examine the effects of major banking policies on financial inclusion across states in India during 1972–2009, using panel data econometrics techniques. We find that the social-banking policy has played crucial role to foster financial inclusion across states in India during 1977–1990. Thereafter, the move toward pro-market financial sector reform has adversely affected the pace of financial inclusion. This paper identifies geographic penetration of banks and credit availability as two policy targets to foster financial inclusion in India.

Suggested Citation

  • Chakravarty, Satya R. & Pal, Rupayan, 2013. "Financial inclusion in India: An axiomatic approach," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 813-837.
  • Handle: RePEc:eee:jpolmo:v:35:y:2013:i:5:p:813-837
    DOI: 10.1016/j.jpolmod.2012.12.007
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    Cited by:

    1. 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.
    2. repec:gam:jsusta:v:10:y:2018:i:4:p:1200-:d:141288 is not listed on IDEAS
    3. Jagjit Chadha & Young-Kwan Kang, 2016. "Finance and Credit in a Model of Monetary Policy," National Institute of Economic and Social Research (NIESR) Discussion Papers 471, National Institute of Economic and Social Research.
    4. Tapsoba, Sampawende J.-A., 2014. "Options and strategies for fiscal consolidation in India," Economic Modelling, Elsevier, vol. 43(C), pages 225-237.
    5. Akin, Tarik & Iqbal, Zamir & Mirakhor, Abbas, 2016. "The composite risk-sharing finance index: Implications for Islamic finance," Review of Financial Economics, Elsevier, vol. 31(C), pages 18-25.
    6. Zarina Abd Rahman, 2015. "Financial inclusion in Malaysia: tracking progress using index," IFC Bulletins chapters,in: Bank for International Settlements (ed.), Proceedings of the Workshop on "Financial Inclusion Indicators", co-hosted by the Bank Negara Malaysia, Sasana Kijang, Kuala Lumpur, 5-6 November 2012, volume 38 Bank for International Settlements.
    7. repec:ine:journl:v:44:y:2017:i:53:p:121-129 is not listed on IDEAS
    8. Goran Amidžić & Alexander Massara & André Mialou, 2014. "Assessing Countries’ Financial Inclusion Standing - A New Composite Index," IMF Working Papers 14/36, International Monetary Fund.
    9. repec:taf:oaefxx:v:4:y:2016:i:1:p:1127011 is not listed on IDEAS
    10. repec:spr:fininn:v:4:y:2018:i:1:d:10.1186_s40854-018-0089-x is not listed on IDEAS
    11. Keshav Sood & Shrabani Mukherjee, 2016. "Triggers and Barriers for ‘Exclusion’ To ‘Inclusion’ in the Financial Sector: A Country-Wise Scrutiny," Working Papers 2016-154, Madras School of Economics,Chennai,India.
    12. repec:eee:jbrese:v:89:y:2018:i:c:p:198-205 is not listed on IDEAS
    13. Recep YORULMAZ, 2013. "Construction of a Regional Financial Inclusion Index in Turkey," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 7(1), pages 79-101.
    14. Irving Fisher Committee, 2015. "Proceedings of the Workshop on "Financial Inclusion Indicators", co-hosted by the Bank Negara Malaysia, Sasana Kijang, Kuala Lumpur, 5-6 November 2012," IFC Bulletins, Bank for International Settlements, number 38, 06-2018.

    More about this item

    Keywords

    Financial inclusion; Axioms; Index; Social banking policy;

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G00 - Financial Economics - - General - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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