Quality financial inclusion and its determinants in South Africa: evidence from survey data

Purpose - The study measured quality financial inclusion, a more comprehensive measure of financial inclusion, and examined its determinants at a consumer level in South Africa. Design/methodology/approach - This study leveraged on FinScope 2015 survey data to compute a quality financial inclusion index using polychoric principal component analysis. Subsequently, a heteroscedasticity consistent ordinary least squares regression model was employed to assess determinants of quality financial inclusion. Findings - The empirical findings indicated that gender, education, financial literacy, income, location and geographical proximity determine quality financial inclusion. These findings could inform policymakers and financial services providers on how quality financial inclusion can be promoted through tailoring financial products for various socio-demographic groups. Research limitations/implications - Due to data limitations, the study was confined to South Africa and did not capture digital financial inclusion. Hence, future studies could replicate the study in Sub-Saharan Africa's context and compute an index that captures digital financial inclusion. Practical implications - These findings could inform policymakers and financial services providers on how quality financial inclusion can be promoted through tailoring financial products for various socio-demographic groups. Originality/value - This study proposed a more comprehensive measure of quality financial inclusion from a demand-side perspective by accounting for important dimensions that include diversity, affordability, appropriateness and flexibility of financial products and services.