IDEAS home Printed from
   My bibliography  Save this article

Impediments in Use of Financial Services: Evidence from North East India


  • Sankharaj Roy


The present study assesses the factors that are significantly related to the use of financial services among the people living in the North-Eastern States of India. This part of the geographical area has a low penetration of banking and financial services as reported in various documents by the regulators. The use of financial services gives a precise picture of the inclusiveness of the financial system. Financial inclusion does not merely mean having a bank account but using that bank account to derive benefits from various financial services. The present study will try to find out the factors acting as impediments towards the use of financial services and affecting the choice of using or not using any such financial services and products. The study is based on the primary data collected using a questionnaire from 1,948 respondents spreading across three states of North East India. Tobit regression analysis is used as the censored regression model to find out the linear relationship between variables affecting the use of financial services. Fitting Tobit regression model, it is found that, the critical factors that are significant towards the use of financial services are financial awareness, economic status of the members, the suitability of financial products, income, education, age of the user and presence of banking correspondents.

Suggested Citation

  • Sankharaj Roy, 2020. "Impediments in Use of Financial Services: Evidence from North East India," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 12(1), pages 7-18, June.
  • Handle: RePEc:rfb:journl:v:12:y:2020:i:1:p:7-18

    Download full text from publisher

    File URL:
    File Function: Full text
    Download Restriction: no

    References listed on IDEAS

    1. Thorsten Beck & Asli Demirgüç-Kunt & Maria Soledad Martinez Peria, 2008. "Banking Services for Everyone? Barriers to Bank Access and Use around the World," The World Bank Economic Review, World Bank Group, vol. 22(3), pages 397-430, November.
    2. Francisco J. Buera & Yongseok Shin, 2013. "Financial Frictions and the Persistence of History: A Quantitative Exploration," Journal of Political Economy, University of Chicago Press, vol. 121(2), pages 221-272.
    3. Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall.
    4. Nitin Kumar, 2013. "Financial inclusion and its determinants: evidence from India," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 5(1), pages 4-19, February.
    5. George R. G. Clarke & Lixin Colin Xu & Heng‐fu Zou, 2006. "Finance and Income Inequality: What Do the Data Tell Us?," Southern Economic Journal, John Wiley & Sons, vol. 72(3), pages 578-596, January.
    6. Loomes, Graham & Sugden, Robert, 1982. "Regret Theory: An Alternative Theory of Rational Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 92(368), pages 805-824, December.
    7. Dhananjay Bapat & Biswa Nath Bhattacharyay, 2016. "Determinants of Financial Inclusion of Urban Poor in India: An Empirical Analysis," CESifo Working Paper Series 6096, CESifo.
    8. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    9. Kinsey, Jean, 1981. "Determinants of Credit Card Accounts: An Application of Tobit Analysis," Journal of Consumer Research, Oxford University Press, vol. 8(2), pages 172-182, September.
    10. Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy around the world: an overview," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(4), pages 497-508, October.
    11. Saibal Ghosh, 2012. "Determinants Of Banking Outreach: An Empirical Assessment Of Indian States," Journal of Developing Areas, Tennessee State University, College of Business, vol. 46(2), pages 269-295, July-Dece.
    12. Perraudin, William R M & Sorensen, Bent E, 1992. "The Credit-Constrained Consumer: An Empirical Study of Demand and Supply in the Loan Market," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(2), pages 179-192, April.
    13. Nitin Kumar, 2013. "Financial inclusion and its determinants: evidence from India," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 5(1), pages 4-19, April.
    14. David Tuesta & Gloria Sorensen & Adriana Haring & Noelia Camara, 2015. "Financial inclusion and its determinants: the case of Argentina," Working Papers 1503, BBVA Bank, Economic Research Department.
    15. repec:ucp:bkecon:9780226316529 is not listed on IDEAS
    16. Noelia Camara & Ximena Pena & David Tuesta, 2014. "Factors that Matter for Financial Inclusion: Evidence from Peru," Working Papers 1409, BBVA Bank, Economic Research Department.
    17. Annamarie Lusardi & Olivia S. Mitchell, 2005. "Financial Literacy and Planning: Implications for Retirement Wellbeing," Working Papers wp108, University of Michigan, Michigan Retirement Research Center.
    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. Evans, Olaniyi, 2016. "Determinants of Financial Inclusion in Africa: A Dynamic Panel Data Approach," MPRA Paper 81326, University Library of Munich, Germany.
    2. Evans, Olaniyi, 2015. "The Effects of Economic and Financial Development on Financial Inclusion in Africa," MPRA Paper 81325, University Library of Munich, Germany.
    3. Anh L.N. Ngo, 2019. "Index of Financial Inclusion and the Determinants: An Investigation in Asia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(12), pages 1368-1382, December.
    4. Fareeha Adil & Abdul Jalil, 2020. "Determining the Financial Inclusion Output of Banking Sector of Pakistan—Supply-Side Analysis," Economies, MDPI, vol. 8(2), pages 1-20, May.
    5. Guillermo Boitano & Deybi Franco Abanto, 2020. "Challenges of financial inclusion policies in Peru," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 12(1), pages 89-117, June.
    6. Rajesh, Raj & Das, Anwesha, 2019. "Drivers of Credit Penetration in Eastern India," MPRA Paper 100385, University Library of Munich, Germany, revised 08 Oct 2019.
    7. Mohamed Noureldin Sayed & Amir Shusha, 2019. "Determinants of Financial Inclusion in Egypt," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(12), pages 1383-1404, December.
    8. Shruti Malik & Girish Chandra Maheshwari & Archana Singh, 2019. "Understanding Financial Inclusion in India: A Theoretical Framework Building Through SAP–LAP and Efficient IRP," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 20(2), pages 117-140, June.
    9. Raccanello, Kristiano & Romero-García, David Arturo, 2012. "Prácticas predatorias y crédito al consumidor," eseconomía, Escuela Superior de Economía, Instituto Politécnico Nacional, vol. 0(36), pages 7-43, cuarto tr.
    10. Ongo Nkoa, Bruno Emmanuel & Song, Jacques Simon, 2020. "Does institutional quality affect financial inclusion in Africa? A panel data analysis," Economic Systems, Elsevier, vol. 44(4).
    11. Isaac Koomson & Abdallah Abdul-Mumuni & Anthony Abbam, 2021. "Effect of financial inclusion on out-of-pocket health expenditure: empirics from Ghana," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(9), pages 1411-1425, December.
    12. Ayushi Raichoudhury, 2020. "Major Determinants of Financial Inclusion: State-Level Evidences from India," Vision, , vol. 24(2), pages 151-159, June.
    13. Smita Ramakrishna (Correspondence author) & Pankaj Trivedi, 2018. "What Determines the Success of Financial Inclusion? An Empirical Analysis of Demand Side Factors," Review of Economics & Finance, Better Advances Press, Canada, vol. 14, pages 98-112, November.
    14. Amrita Chatterjee & Simontini Das, "undated". "Information and Communication Technology Diffusion and Financial Inclusion: An Interstate Analysis for India," Working Papers 2019-178, Madras School of Economics,Chennai,India.
    15. Llanto, Gilberto M. & Rosellon, Maureen Ane D., 2017. "What Determines Financial Inclusion in the Philippines? Evidence from a National Baseline Survey," Discussion Papers DP 2017-38, Philippine Institute for Development Studies.
    16. Sanjaya Kumar Lenka & Arun Kumar Bairwa, 2016. "Does financial inclusion affect monetary policy in SAARC countries?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1127011-112, December.
    17. Beza Muche Teka & Simon Nahusenay & Taddess Asmare, 2020. "Determinants of Financial Inclusion in East Gojjam, Ethiopia," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 10(4), pages 1-4.
    18. Saten Kumar, 2016. "Is the US Consumer Credit Asymmetric?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(2), pages 194-215, May.
    19. Wu, Guiying Laura, 2018. "Capital misallocation in China: Financial frictions or policy distortions?," Journal of Development Economics, Elsevier, vol. 130(C), pages 203-223.
    20. Peter W. Muriu, 2021. "Does the Quality of Institutions Matter for Financial Inclusion? Cross Country Evidence," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(7), pages 1-27, June.

    More about this item


    Access and download statistics


    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:rfb:journl:v:12:y:2020:i:1:p:7-18. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

    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: Tatu Lucian (email available below). General contact details of provider: .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.