This study re-examines the construct of financial inclusion, through a literature review and confirmatory factor analysis (CFA). First, we conduct a systematic review of definitions, measures, and data sources. Second, we apply CFA to test two prominent financial inclusion indices. The CFA analysis reveals a high correlation between the “access” and “use” dimensions; hence, indices fail to capture the multidimensionality of financial inclusion. Existing indices tend to be biased toward measuring the supply-side and quantitative aspects of financial inclusion. The extent to which lower-income individuals and smaller firms have been incorporated into the formal financial sector is not captured.
|Journal||Journal of International Development|
|Publication status||Accepted/In press - 17 Nov 2020|
- Financial inclusion
- access to finance
- systematic review
- confirmatory factor analysis