Author:
Yadav Priyanka,Sharma Anil Kumar
Abstract
Purpose
The purpose of this paper is to combine the critical parameters used to study financial inclusion into a composite index. The idea is to rank Indian states and union territories (UTs) on the basis of this index, determine change in ranks during 2011 to 2014 and identify factors affecting high/low scores on the index.
Design/methodology/approach
Data for the study were collected from secondary sources published by Reserve Bank of India (RBI) and Central Statistical Organization. Applying technique of order preference by similarity to ideal solution (TOPSIS), a composite multi-dimensional index of financial inclusion (IFI) has been built by using three broad parameters of penetration, availability and usage of banking services. Factors significantly influencing scores of states/UTs on IFI were identified using multiple regression analysis.
Findings
The value of financial inclusion for India on composite IFI has increased by 0.045 points during the study period. Share of agriculture to state gross domestic product, literacy ratio, population density, infrastructure development and farmer suicides are significant factors affecting financial inclusion.
Practical implications
The multi-dimensional IFI is a useful tool to measure financial inclusion using several parameters for various states/regions. The index can also be used to compare the performance of states/regions over same/different periods.
Originality/value
This paper is unique in its attempt to construct multi-dimensional IFI for Indian states/UTs by applying TOPSIS. It will prove useful for future researchers by combining several aspects of financial inclusion into single index.
Subject
Economics and Econometrics,Philosophy
Reference86 articles.
1. Economic performance of states in post-reforms period;Economic and Political Weekly,2000
2. An assessment of branch expansion of scheduled commercial banks in India;Journal of Business and Economic Policy,2014
3. Allen, F., Carletti, E., Cull, R., Qian, J. and Senbet, L.W. (2010), “The African financial development gap”, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1362216 (accessed 12 March 2015).
4. Allen, F., Demirgüç-Kunt, A., Klapper, L.F. and Martinez Peria, M.S. (2012), “The foundations of financial inclusion: understanding ownership and use of formal accounts”, World Bank Policy Research Working Paper No. 6290, World Bank, Washington, DC.
5. Amidžic, G., Massara, A. and Mialou, A. (2014), “Assessing countries’ financial inclusion standing: a new composite index”, Working Paper No. 13/46, International Monetary Fund, Washington, DC.
Cited by
28 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献