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Index of Financial Inclusion

Author

Listed:
  • Mandira Sarma

    (Indian Council for Research on International Economic Relations)

Abstract

The promotion of an inclusive financial system is considered a policy priority in many countries. While the importance of financial inclusion is widely recognized, the literature lacks a comprehensive measure that can be used to measure the extent of financial inclusion across economies. This paper attempts to fill this gap by proposing an index of financial inclusion (IFI). The IFI is a multi-dimensional index that captures information on various dimensions of financial inclusion in one single digit lying between 0 and 1, where 0 denotes complete financial exclusion and 1 indicates complete financial inclusion in an economy. The proposed index is easy to compute and is comparable across countries.

Suggested Citation

  • Mandira Sarma, 2008. "Index of Financial Inclusion," Finance Working Papers 22259, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:financ:22259
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    File URL: http://www.eaber.org/node/22259
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    References listed on IDEAS

    as
    1. Sagar, Ambuj D. & Najam, Adil, 1998. "The human development index: a critical review," Ecological Economics, Elsevier, vol. 25(3), pages 249-264, June.
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    More about this item

    Keywords

    financial inclusion; IFI; multi-dimensional index; normalized inverse Euclidean distance;
    All these keywords.

    JEL classification:

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

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