Measuring Financial Inclusion: A Muldimensional Index
BBVA Research Paper No. 14/26
40 Pages Posted: 23 Jul 2015
Date Written: September 22, 2014
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: Suggested Citation