Usage of formal financial services in India:: Demand barriers or supply constraints?
Usage of formal financial services in India:: Demand barriers or supply constraints?
Estimating the role of both demand-side and supply-side factors in financial inclusion and its distribution is important for policy making. However, existing literature has primarily focused on supply-side factors. In this context, this paper estimates relative importance of removing demand-side barriers and eliminating supply constraints to enhance financial inclusion in India. It also measures the extent of concentration of usage of formal financial services among richer households. Results suggest that, while availability of banking services has a significant positive effect on usage of formal financial services, its contribution in inducing households to use formal financial services is very small compared to the contribution of factors, such as education, income, employment status, gender and social norms, that influence the demand for formal financial services. It highlights the importance of placing greater emphasis on addressing demand-side barriers, rather than on improving physical availability of banking services, to promote financial inclusion in India.
244-259
Kumar, Abhishek
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Pal, Rama
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Pal, Rupayan
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22 November 2018
Kumar, Abhishek
bf1591a0-5a8b-40ae-a3b3-6a4ef990564e
Pal, Rama
0e4de59f-5b4f-438a-9759-9d39a0dfe9f5
Pal, Rupayan
bd741a3a-f6a0-41e0-bcec-063f38aa935d
Kumar, Abhishek, Pal, Rama and Pal, Rupayan
(2018)
Usage of formal financial services in India:: Demand barriers or supply constraints?
Economic Modelling, 80, .
(doi:10.1016/j.econmod.2018.11.010).
Abstract
Estimating the role of both demand-side and supply-side factors in financial inclusion and its distribution is important for policy making. However, existing literature has primarily focused on supply-side factors. In this context, this paper estimates relative importance of removing demand-side barriers and eliminating supply constraints to enhance financial inclusion in India. It also measures the extent of concentration of usage of formal financial services among richer households. Results suggest that, while availability of banking services has a significant positive effect on usage of formal financial services, its contribution in inducing households to use formal financial services is very small compared to the contribution of factors, such as education, income, employment status, gender and social norms, that influence the demand for formal financial services. It highlights the importance of placing greater emphasis on addressing demand-side barriers, rather than on improving physical availability of banking services, to promote financial inclusion in India.
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Accepted/In Press date: 11 November 2018
Published date: 22 November 2018
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Local EPrints ID: 494643
URI: http://eprints.soton.ac.uk/id/eprint/494643
ISSN: 0264-9993
PURE UUID: ff8c4315-daa3-425e-9a67-3888349f8509
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Date deposited: 11 Oct 2024 16:56
Last modified: 12 Oct 2024 02:50
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Author:
Abhishek Kumar
Author:
Rama Pal
Author:
Rupayan Pal
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