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ORCID

Goran Amidzic 0000-0003-4791-3651

Keywords

Financial inclusion; access and usage of financial services; factor analysis; index

Abstract

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.

Acknowledgments

Authors would like to thank the following colleagues for helpful comments: Adolfo Barajas, Anja Baum, Joe Crowley, Rob Dippelsman, Luca Errico, Agus Firmansyah, Yuko Hashimoto, Alicia Hierro, Izabela Karpowicz, Phousnith Khay, Yevgeniya Korniyenko, Plapa Koukpamou, Elena Loukoianova, Mike Seiferling, Mick Silver, Aaron Thegeya and Richard Walton

First Page

105

Last Page

126

Page Count

22

Received Date

25 March 2016

Revised Date

05 June 2016

Accept Date

05 June 2016

Online Available Date

24 August 2017

DOI

10.7172/2353-6845.jbfe.2017.2.5

JEL Code

C43; C82; O16; G00; G21

Publisher

University of Warsaw

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