SOAS Research Online

Abstract

Financial inclusion is a central theme in development policy. While it involves changes at the individual level and comprises several interrelated financial activities, most existing measures rely on macroeconomic variables. We construct an alternative index of financial inclusion using the World Bank Findex—a microdata dataset with 451,372 observations. Applying it, we first analyse the socio-economic determinants of financial inclusion. Second, we propose a new country ranking of financial inclusion. Our findings comprise three features. First, we do not find evidence of a gender gap in low- and middle-income countries. Second, richer individuals display higher levels of financial inclusion. Third, countries with high self-employment rates exhibit lower levels of financial inclusion. Our results suggest that financial inclusion is more related to income and employment status than gender disparities, which could lead to a different approach from policymakers on promoting the inclusion of the poor into the formal financial system.