Assessing Countries’ Financial Inclusion Standing

Assessing Countries’ Financial Inclusion Standing - A New Composite Index

By Goran Amidžić, Alexander Massara, André Mialou

February 21, 2014

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Goran Amidžić, Alexander Massara, and André Mialou. Assessing Countries’ Financial Inclusion Standing - A New Composite Index, (USA: International Monetary Fund, 2014) accessed December 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper leverages the IMF’s Financial Access Survey (FAS) database to construct a new composite index of financial inclusion. The topic of financial inclusion has gathered significant attention in recent years. Various initiatives have been undertaken by central banks both in advanced and developing countries to promote financial inclusion. The issue has also attracted increasing interest from the international community with the G-20, IMF, and World Bank Group assuming an active role in developing and collecting financial inclusion data and promoting best practices to improve financial inclusion. There is general recognition among policy makers that financial inclusion plays a significant role in sustaining employment, economic growth, and financial stability. Nonetheless, the issue of its robust measurement is still outstanding. The new composite index uses factor analysis to derive a weighting methodology whose absence has been the most persistent of the criticisms of previous indices. Countries are then ranked based on the new composite index, providing an additional analytical tool which could be used for surveillance and policy purposes on a regular basis.

Subject: Commercial banks, Expenditure, Financial inclusion, Financial institutions, Financial markets, Financial services, National accounts, Personal income, Public expenditure review

Keywords: A number of variable, Access and usage of financial services, Borrowers variable, Commercial banks, Composite index value, Cross-dimension composite index, Factor analysis, Financial inclusion, Geometric mean, Global, Household depositor, Income group, Index, Normalized variable, Outreach variable, Personal income, Public expenditure review, Scale invariance, Usage variable, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2014/036
Stock No:

WPIEA2014036
ISBN:

9781475569681
ISSN:

1018-5941

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