Measuring Financial Inclusion: A Muldimensional Index

BBVA Research Paper No. 14/26

40 Pages Posted: 23 Jul 2015

See all articles by Noelia Cámara

Noelia Cámara

BBVA Research – Ciudad BBVA

David Tuesta

BBVA Research

Date Written: September 22, 2014

Abstract

We rely on demand and supply-side information to measure the extent of financial inclusion at country level for eighty-two developed and less-developed countries. We postulate that the degree of financial inclusion is determined by three dimensions: usage, barriers and access to financial inclusion. Weights assigned to the dimensions are determined endogenously by employing a two-stage Principal Component Analysis. Our composite index offers a comprehensive measure of the degree of financial inclusion, easy to understand and compute.

Keywords: Financial inclusion, Principal Component Analysis, inclusion barriers

JEL Classification: C43, G21, O16

Suggested Citation

Cámara, Noelia and Tuesta, David Alfredo, Measuring Financial Inclusion: A Muldimensional Index (September 22, 2014). BBVA Research Paper No. 14/26, Available at SSRN: https://ssrn.com/abstract=2634616 or http://dx.doi.org/10.2139/ssrn.2634616

Noelia Cámara

BBVA Research – Ciudad BBVA ( email )

C/ Azul,4. Edificio La Vela. Planta 4
Madrid, 28050
Spain

David Alfredo Tuesta (Contact Author)

BBVA Research ( email )

Paseo de Recoletos, 10
Madrid
Spain

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