Financial inclusion in Indonesia: Does education matter?

Abstract

This study attempts to examine education as a critical proxy for financial inclusion in Indonesia using the Global Findex 2017 database from the World Bank survey. The results showed low financial inclusion in Indonesia, indicated by the low score of the financial inclusion index. Further analysis also suggests that education attainment significantly affects financial inclusion, whose indicators include the financial inclusion index (FII), account ownership, mobile or internet banking, and borrowing from financial institutions in the past 12 months. These four indicators show that financial inclusion increases with education. The findings confirm that highly educated people are considered financially included, and the great difference in educational level may create a significant gap in financial inclusion. Therefore, more people should attain higher education to increase financial inclusion and contribute to national development.