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Financial Inclusion: New Measurement and Cross-Country Impact Assessment

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  • Cyn-Young Park

    (Asian Development Bank)

  • Rogelio Mercado Jr.

    (South East Asian Central Banks (SEACEN) Research and Training Centre)

Abstract

This paper introduces a new index of financial inclusion for 151 economies using principal component analysis to compute weights for aggregating 9 indicators of access, availability, and usage. It then assesses the impact of financial inclusion on poverty and income inequality. The results provide evidence that high and middle-high-income economies with high financial inclusion have significantly lower poverty, while no such relation exists for middle-low and low-income economies. The nonlinearities in the cross-country determinants and impacts of financial inclusion on poverty and income inequality across income groups are important to choosing the appropriate policies for achieving inclusive growth in different development stages.

Suggested Citation

  • Cyn-Young Park & Rogelio Mercado Jr., 2018. "Financial Inclusion: New Measurement and Cross-Country Impact Assessment," Working Papers wp29, South East Asian Central Banks (SEACEN) Research and Training Centre.
    • Handle: RePEc:sea:wpaper:wp29
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    File URL: https://www.seacen.org/publications/RePEc/702002-100432-PDF.pdf
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    References listed on IDEAS

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    4. Cyn-Young Park & Rogelio Mercado, 2018. "Financial Inclusion, Poverty, And Income Inequality," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(01), pages 185-206, March.
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    10. Cyn-Young Park & Rogelio Mercado, Jr., 2018. "Financial Inclusion: New Measurement and Cross-Country Impact Assessment," ADB Economics Working Paper Series 539, Asian Development Bank.
    11. Dupas, Pascaline & Robinson, Jonathan, 2008. "Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya," Santa Cruz Department of Economics, Working Paper Series qt01x12117, Department of Economics, UC Santa Cruz.
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    Keywords

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    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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