Measuring fintech-driven financial inclusion for developing countries: Comprehensive Digital Financial Inclusion Index (CDFII)
Purpose ― The main objective of this study is to develop a comprehensive digital financial inclusion index (CDFII) that accounts for technology-driven financial inclusion and to compare it with a traditional financial inclusion index (TFII) to enhance the measurement of fintech-driven financial inc...
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| Format: | Article |
| Language: | English |
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Universitas Islam Indonesia
2023-10-01
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| Series: | Economic Journal of Emerging Markets |
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| Online Access: | https://jurnal.uii.ac.id/JEP/article/view/29406 |
| _version_ | 1827395844206231552 |
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| author | Banna Banik Chandan Kumar Roy |
| author_facet | Banna Banik Chandan Kumar Roy |
| author_sort | Banna Banik |
| collection | DOAJ |
| description |
Purpose ― The main objective of this study is to develop a comprehensive digital financial inclusion index (CDFII) that accounts for technology-driven financial inclusion and to compare it with a traditional financial inclusion index (TFII) to enhance the measurement of fintech-driven financial inclusion across countries.
Methods ― The study employs a three-stage principal component analysis (PCA) to construct the CDFII and TFII using the latest available data from 31 developing countries during the period 2015-2021. The CDFII incorporates a new sub-index measuring individual literacy levels for using financial services, along with existing sub-indices capturing the penetration, availability, and usage of DFS. By integrating digital financial inclusion (DFII) and TFII, the overall CDFII is estimated.
Findings ― The findings reveal that the levels of DFII and CDFII are higher than TFII for most of the economies examined. This indicates the significant impact of technology-driven financial inclusion in expanding access to formal banking and non-banking financial services for previously unbanked populations.
Implication ― The study implies that policymakers and researchers should prioritize the integration of technology-driven financial inclusion indicators, such as the comprehensive digital financial inclusion index (CDFII), into their assessments and interventions to ensure a more accurate and effective approach to promoting inclusive and sustainable economic development.
Originality ― This study introduces the CDFII as a novel comprehensive index that addresses the shortcomings of traditional financial inclusion indices. By incorporating individual skill levels and considering dimensions specific to DFS, the CDFII provides a more accurate representation of fintech-driven financial inclusion levels. This contributes to the existing literature on financial inclusion measurement and provides a valuable analytical tool for researchers and policymakers.
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| first_indexed | 2024-03-08T18:40:44Z |
| format | Article |
| id | doaj.art-3a78ecc2e5844e4fbd79156c353ff566 |
| institution | Directory Open Access Journal |
| issn | 2086-3128 2502-180X |
| language | English |
| last_indexed | 2024-03-08T18:40:44Z |
| publishDate | 2023-10-01 |
| publisher | Universitas Islam Indonesia |
| record_format | Article |
| series | Economic Journal of Emerging Markets |
| spelling | doaj.art-3a78ecc2e5844e4fbd79156c353ff5662023-12-29T06:55:45ZengUniversitas Islam IndonesiaEconomic Journal of Emerging Markets2086-31282502-180X2023-10-01152Measuring fintech-driven financial inclusion for developing countries: Comprehensive Digital Financial Inclusion Index (CDFII)Banna Banik0Chandan Kumar Roy1Bangladesh Bank, Dhaka, BangladeshBangladesh Bank, Dhaka, Bangladesh Purpose ― The main objective of this study is to develop a comprehensive digital financial inclusion index (CDFII) that accounts for technology-driven financial inclusion and to compare it with a traditional financial inclusion index (TFII) to enhance the measurement of fintech-driven financial inclusion across countries. Methods ― The study employs a three-stage principal component analysis (PCA) to construct the CDFII and TFII using the latest available data from 31 developing countries during the period 2015-2021. The CDFII incorporates a new sub-index measuring individual literacy levels for using financial services, along with existing sub-indices capturing the penetration, availability, and usage of DFS. By integrating digital financial inclusion (DFII) and TFII, the overall CDFII is estimated. Findings ― The findings reveal that the levels of DFII and CDFII are higher than TFII for most of the economies examined. This indicates the significant impact of technology-driven financial inclusion in expanding access to formal banking and non-banking financial services for previously unbanked populations. Implication ― The study implies that policymakers and researchers should prioritize the integration of technology-driven financial inclusion indicators, such as the comprehensive digital financial inclusion index (CDFII), into their assessments and interventions to ensure a more accurate and effective approach to promoting inclusive and sustainable economic development. Originality ― This study introduces the CDFII as a novel comprehensive index that addresses the shortcomings of traditional financial inclusion indices. By incorporating individual skill levels and considering dimensions specific to DFS, the CDFII provides a more accurate representation of fintech-driven financial inclusion levels. This contributes to the existing literature on financial inclusion measurement and provides a valuable analytical tool for researchers and policymakers. https://jurnal.uii.ac.id/JEP/article/view/29406Financial InclusionFintechDigital Financial ServicesComprehensive Digital Financial Inclusion Index |
| spellingShingle | Banna Banik Chandan Kumar Roy Measuring fintech-driven financial inclusion for developing countries: Comprehensive Digital Financial Inclusion Index (CDFII) Economic Journal of Emerging Markets Financial Inclusion Fintech Digital Financial Services Comprehensive Digital Financial Inclusion Index |
| title | Measuring fintech-driven financial inclusion for developing countries: Comprehensive Digital Financial Inclusion Index (CDFII) |
| title_full | Measuring fintech-driven financial inclusion for developing countries: Comprehensive Digital Financial Inclusion Index (CDFII) |
| title_fullStr | Measuring fintech-driven financial inclusion for developing countries: Comprehensive Digital Financial Inclusion Index (CDFII) |
| title_full_unstemmed | Measuring fintech-driven financial inclusion for developing countries: Comprehensive Digital Financial Inclusion Index (CDFII) |
| title_short | Measuring fintech-driven financial inclusion for developing countries: Comprehensive Digital Financial Inclusion Index (CDFII) |
| title_sort | measuring fintech driven financial inclusion for developing countries comprehensive digital financial inclusion index cdfii |
| topic | Financial Inclusion Fintech Digital Financial Services Comprehensive Digital Financial Inclusion Index |
| url | https://jurnal.uii.ac.id/JEP/article/view/29406 |
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