Purpose This research paper explores the relationship of financial inclusion and socio-economic welfare among the Marginalized populations in India, that is below poverty line (BPL) households. It identifies the important demand-side determinants of inclusion and establishes their impact on the welfare of households. Design/methodology/approach A structured survey was conducted among 400 BPL households. The links between the constructs were examined using Structural Equation Modelling (SEM) and Confirmatory Factor Analysis (CFA) was performed to ensure the reliability and validity of the measurement model. Findings The study identifies five key demand-side dimensions of financial inclusion: physical proximity, availability, affordability, usage and accessibility. Among them, a strong positive influence on the financial inclusion was observed on affordability, physical proximity, and usage. However, it was not correlated with the access significantly, which indicates that mere physical presence does not translate into meaningful Financial Inclusion. On its part, financial inclusion has a positive effect on socio-economic welfare. Practical implications The implications of the findings are that the policy initiatives cannot be viewed as a provider of services but rather enhance the affordability, accessibility and the active use of financial services to establish meaningful inclusiveness of the Marginalized groups. Originality/value This study advances the financial inclusion discourse by developing and empirically validating a multidimensional (usage, affordability, accessibility, physical proximity, availability), framework and linking it to both social and economic well-being among Marginalized BPL households using primary data. The analysis of demand-side determinants combined with household welfare outcomes provides richer and more nuanced insights and evidence-based action to implement more inclusive and effective financial policies in India.
Aggarwal et al. (Sat,) studied this question.