Financial inclusion had been considered as a stimulant for economic growth.   However scientist use formal financial sector to evaluate the strength of financial inclusion. How it is logical or rational

google it you will find many article on this topic... in my opinion, credibility of the creditor, past record of creditor, the degree of awareness of basic banking services, credit-deposit ratio etc. may affect the financial inclusion.

Supportive economic policies of the Government coupled with conducive macro economic environment can ensure that beneficiaries of loans could go ahead with some productive economic activity. Now, as pointed out by Saad Balock Sir (PIDE), due diligence by the respective financial institutions / banks (lenders) matters a lot. Because, the amount lent by them should necessarily come back to ensure the long term sustainability of the Inclusive policies. Besides a permanent mechanism for the regulation and promotion of Financial Inclusion and allied developmental activities at the national level should be there to keep a constant vigil on the progress of such efforts.  

The major variables (factors) or determinants of Financial Inclusion other than those pointed out above include (i) the level of awareness of the target community - the excluded masses - regarding such schemes, including their level of technological readiness, (ii) socio-economic status of the individual beneficiaries, (iii) support from other family members, (iv) peer-group pressure (in respect of SHG loans) etc. etc.

Dr. MANOJ P K, Faculty Member, CUSAT, KERALA, INDIA.   

Ony three Factors which influence for financial inclusion are usage, accessibility and service.

Theses are factors which determinants financial inclusion.Take some literature review then you will understand.

With reference to the three factors pointed out by Jayanthi Muthusamy Madam, it may be pointed out that those three factors might be true in a particular scenario or socio-economic environment, say, in an Indian state like Tamil Nadu. But, that can not be generalized. This is to point out that In Indian scenario itself, there are many studies that point out some other factors as statistically significant, and some other as not statistically significant. These factors (determinants) in turn have inter-state variations within India. Four typical studies in the Indian context are attached (these are freely downloadable too) which show that determinants may vary from context to context.

To sum up, in the specific case of Upananda Sir who is bothered about the Sri Lankan scenario, all the factors that are found significant in earlier studies like Income, Literacy etc. (including the three pointed out by Jayanthi Madam) could be considered. Then using Regression / Factor analysis etc. the really relevant factors could be identified. Of course, you will see that there are differences from the findings of earlier studies.  

With regards 

Dr. MANOJ P K, Faculty Member, DAE, CUSAT, KERALA, INDIA.

Dear Manoj,

Thanks a lot for your informative reply.

Upananda

Hi Upananda,

I know that the World Bank has worked on the financial inclusion in LDCs for quite a while. Thus, in addition to the interesting papers Manoj sent, you may consider to look at the links below, where you can find working papers and data on the issue:

http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTPROGRAMS/EXTFINRES/EXTGLOBALFIN/0,,contentMDK:23147627~pagePK:64168176~piPK:64168140~theSitePK:8519639,00.html

http://datatopics.worldbank.org/financialinclusion/

http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTGLOBALFINREPORT/0,,menuPK:8816192~pagePK:64168176~piPK:64168140~theSitePK:8816097,00.html

I hope this help!

Ralph

Thanks very much Ralph for your kindness.

Upananda