Exploring Linkages between Telecom and Financial Inclusion: An Innovative Strategy for Success

Abstract

Financial inclusion is a key facilitator for reducing poverty and boosting prosperity. In the knowledge intensive global scenario, Telecommunication is emerging as a key driver for economic development. National Telecom Policy-2012 was formulated to transform India by overcoming the developmental challenges. Telecom may play a significant role in bringing financial services and helping people to improve their livelihood. For the study, the sample size is 400 (200 each from Gujarat and West Bengal). The sampling unit is households and the technique is random. The two dimensions namely, Financial Inclusion and telecom have been considered for the study. For each dimensions, latent constructs are Awareness, Usability and Ability. The proposed Model has telecom as exogenous construct and financial inclusion as Dependent construct. Structural Equation Modeling (SEM) has been applied using SmartPLS software package for analysis. In the study Indicator Reliability, Composite Reliability, Convergent Validity, Discriminant Validity, Multicollinearity (BIF) and Model Predictive Relevance (Q²) have been illustrated. Results of bootstrapping indicate that in the model out of 9 paths, impact is significant in 7 cases. Hence, based on the results it is concluded that there is a clear evidence of positive impact of telecommunication on financial inclusion.

Keywords: Financial Inclusion, Partial Least Square, SmartPLS, Structural Equation Modelling, Telecommunication