The convergence of financial inclusion across provinces in Vietnam: A novel approach

Financial inclusion has generally been considered an effective mechanism to support economic growth and reduce Vietnam's poverty for the last decade. While the importance of financial inclusion to economic growth or macroeconomic stability has been widely examined, it appears that the degree of financial inclusion across Vietnam has not attracted attention from academics and policymakers. In particular, a convergence of financial inclusion across provinces in Vietnam has never been examined. This paper is conducted to examine the static and dynamic distributions of financial inclusion across provinces in Vietnam. The latest three biennial surveys from 2014 to 2018 and a novel approach known as the dynamic kernel density function are used in this study. Our results indicate that Vietnam's economic growth and development over the 2014-2018 period is relatively inclusive. The evidence also demonstrates that households provided with access to multiple sources of finance depend significantly on the provincial level of income. We also find that provinces located in the national key economic regions, including (i) the Northern region and (ii) the Southern region, appear to achieve a higher degree of financial inclusiveness. Our findings also confirm the catching-up from the financially disadvantaged provinces to financially advantaged provinces locating within the key economic regions. We argue that understanding the asymmetric effect of economic growth on financial inclusion will be helpful for the Vietnamese government in formulating and implementing economic policies promptly to secure the sustainable and inclusive goals of economic growth and development in the future.