Extent determinants and impact of financial inclusion in Punjab

Abstract

Financial inclusion is the way of providing financial services at reasonable prices to low-income group. It is the base for economic growth by mobilizing saving for productive investments plans. The Financial Inclusion Index can be used as a tool for measuring economic and social growth. In the present study, District wise variations in the extent of financial inclusion has been measured. Three dimensions; branch penetration, banking availability and banking usage have been used for calculating the index of financial inclusion. Results revealed that majority of districts of Punjab have medium category of financial inclusion index. Tarn Taran has lowest IFI rank as well as lowest rank in banking penetration, banking availability and banking usage which indicates that Supply and demand side indicators of financial inclusion are responsible for the lowest rank. Present study discusses the barriers to financial inclusion and results identified knowledge, infrastructure, eligibility, psychological price, usage and self-exclusion as the barriers to financial inclusion Results of data analysis also disclosed that male is using financial services more than female. In this study Cox and Snell R2 indicates that 0.621 or 62.1% variation in the use of basic banking services (saving and credit) was explained by the explanatory variables. Results indicate that awareness level of government schemes and usage level of banking services and using bank accounts for saving money and availing credit are significant factors of socioeconomic conditions. Perceived benefits of financial inclusion which uplift the social and economic level are also determined. newline