Measuring Financial Inclusion: A Multidimensional Index

Type Working Paper
Title Measuring Financial Inclusion: A Multidimensional Index
Author(s)
Issue 14/26
Publication (Day/Month/Year) 2014
URL https://www.bbvaresearch.com/wp-content/uploads/2014/09/WP14-26_Financial-Inclusion.pdf
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 others a comprehensive measure of the degree of financial inclusion, easy to understand and compute.

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