The Examination of Factors Affecting Financial Inclusion in Asian Countries

Abstract

Purpose | The aim of the paper is to examine the impact of economic and non-economic factors on financial inclusion in Asian countries. The factors were covered at macro level (GDP per capita, population density, and unemployment rate), at micro level (Domestic Credit provided by sector as a percent of GDP), and at meso level (the mobile phone penetration). Research method | The fixed effect model (FEM) and the random effects model (REM) were used to quantify the effect of independent variables on financial inclusion. FEM was chosen in this article based on the Hausman test results. Results | The article has given conclusions as follows: (i) GDP growth, domestic credit, and mobile phone penetration have a significant positive effect on financial inclusion; (ii) there is a negative effect of population density, contrary to most studies; (iii) as in other studies, the unemployment rate has the negative impact on financial inclusion. Originality / value / implications / recommendations | The study has included different types of independent variables. In addition to the unemployment rate, population density, domestic credit and GDP growth rate, the impact of mobile phone penetration on financial inclusion was examined. The evolution of mobile telecommunications has become a central point of public policy debate due to the key role it plays in improving living standards, financial inclusion and economic growth.