Читать книгу The Political Economy of the BRICS Countries - Группа авторов - Страница 100

When looking at what drives financial inclusion across countries, past evidence highlights several determinants. Among others, Sarma and Pais (2011), for instance, show that income, inequality, adult literacy, and urbanization can be considered important factors for explaining the level of financial inclusion in a country. Physical and electronic connectivity and information availability have also been found to play an important role. Ardic et al. (2011) found GDP per capita and population density to be both significantly and positively associated with deposit account penetration. The number of outstanding loans, on the other hand, was found to be negatively correlated with inflation. Kendall et al. (2010) found that bank branches per 100,000 adults seem to be a significant determinant of the number of deposit accounts in commercial banks, while inflation was also found to act as a constraint.

Table 4:Alternative sources of borrowing in the BRICS.

Note: NR = Not Reported; Average = Simple average of the figures under each head for BRICS.

To investigate this carefully, we conduct a cross-country analysis of 32 emerging market and developing economies (EMDEs) for 2017, using the recently released FINDEX database. We use the following dependent variables: (a) the percentage of the population having account at a formal financial institution (age 15+), and (b) the percentage of the population that had saved at a financial institution (age 15+). Without loss of generality, the former is used as a proxy for access to finance and the latter is a proxy for the use of finance. In addition, we control for the overall country’s economic development by using GDP per capita. Inflation is taken as a proxy for macroeconomic stability and domestic credit to private sector as percentage of GDP, and commercial bank branches (per 100,000 adults) are taken as proxies for financial development and financial infrastructure, respectively. Besides, internet usage (per 100 people) is considered to capture the technological infrastructure and educational attainment (captured by the net primary enrolment ratio) as a proxy for human capital. Our focus is on the coefficient for the India dummy.

Table 5:Determinants of financial inclusion in EMDEs.

Note: Robust standard errors in parentheses.

***p < 0.01; **p < 0.05; *p < 0.10.

The results in Table 5 show that GDP per capita and domestic credit to private sector are significant determinants of access. Inflation was negative and significant, indicating that in an inflationary environment, people prefer to hold real assets in place of nominal assets. Other variables such as population density, enrolment in primary school, and number of bank branches were also found to positive but not significant. The coefficient of interest — India — was positive and statistically significant, indicating that India fares better than the average EMDE with respect to access to formal finance. On average, access to finance is anywhere between 0.18 and 0.21 percentage points higher in India as compared with other EMDEs. However, when it comes to use, the evidence is less convincing. In other words, having successfully ensured access to finance, the policy needs to reorient itself towards incentivizing people into using these accounts.