Financial inclusion in India: an analysis from the user-side perspective

Abstract

PurposeThe aim of the paper is to examine the status and determinants of financial inclusion in India by using the recent micro-level survey data.Design/methodology/approachThe authors construct a multidimensional financial inclusion index to measure the status of financial inclusion in the selected 17 states of India. Subsequently, the authors use the probit model estimation to examine the determinants of all financial inclusion indicators.FindingsThe authors find that southern and north-eastern states perform better in the overall financial inclusion index. In contrast, states like Odisha, Madhya Pradesh, Chhattisgarh, Rajasthan and Uttar Pradesh lag behind. The estimated result shows that the probability of being financially included is higher among urban, richer, educated and salaried individuals. Further, the findings indicate the lower penetration of bank branches and ATMs in the rural parts of the country.Originality/valueWhile numerous studies have explored financial inclusion from a macro-level perspective, there exists a notable gap in the literature at the micro-level. This paper aims to address this gap and contributes to the existing literature in two ways. Firstly, it uses the recent micro-level survey data to construct a multidimensional financial inclusion index for the selected Indian states. Secondly, it examines individual-level attributes as the determining factors of financial inclusion, which has been overlooked in India.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-03-2023-0162