The School of Economics invites you to a Macro/Trade seminar by Cyn-Young Park (Asian Development Bank).

Financial Inclusion: A New Measurement and Cross-Country Impact Assessment

Co-authors: 

Rogelio V. Mercado, Jr. (South East Asian Central Banks)

Abstract

This paper introduces a new composite index of financial inclusion for 151 economies using principal component analysis to compute weights for aggregating nine indicators of access, availability, and usage. Using the index, this paper assesses the impact of financial inclusion on poverty, income inequality, entrepreneurship, and female borrowing. Using a cross-sectional approach, the results provide robust evidence that higher financial inclusion significantly lowers poverty rates and increases entrepreneurship and female borrowing. However, the impacts of financial inclusion on poverty and other social goals are heterogeneous across country income groups, with the unit increase in financial inclusion yielding the largest reduction in poverty for low-income countries.