A Comprehensive Approach to Measuring Financial Inclusion of Countries Across the World

Many governments across the world have implemented several programmes to promote inclusive finance. Still, the issues of economic exclusion and poverty continue to haunt developing and developed countries, although in different proportions. Measurement of financial inclusion assumes importance as it provides direction to decide on the allocation of resources, such that the excluded are brought to the mainstream. Researchers have measured financial inclusion through various parameters such as accessibility and use of banking or other recognised financial services. However, these parameters need to be more comprehensive to measure financial inclusion that can be sustained. Towards this end, authors have considered non-banking financial organisations, like post offices, microfinance organisations, and banks, across three dimensions: demand, supply, and infrastructure. Moreover, the impact of negatively impacting factors termed as drag is also considered. This study computes financial inclusion in 2010 across 121 countries and analyses its extent in various parts of the world.