Measuring Financial Inclusion and Its Impact on Macroeconomic Goals in South Asian countries

Abstract

Financial inclusion is a key element of social inclusion, particularly useful in increasing inclusive growth by opening blocked advancement opportunities for underprivileged segments of the population. This study empirically investigates the impact of financial inclusion on macroeconomic goals in South Asian countries. The analysis is carried out using annual panel data for the period of 2004-2018. For this purpose, the study constructs two novel indices: financial inclusion index (FII) which measures the level of financial inclusion and modified human development index (i.e., HDIM) which measures inclusive growth. Particularly, the study uses availability, accessibility and usages of formal financial services for FII.