Factors affecting financial inclusion: A case study of Punjab
Dr. Jatinder Kaur
This paper attempts to identify the factors affecting financial inclusion in the state of Punjab using a district level Financial Inclusion Index (FII) developed by the author (2017) for the said state. The study has been undertaken by considering literacy rate, degree of urbanization, district gross domestic product and proportion of working population as the main socio-economic determinants of financial inclusion. To identify the important determinants of financial inclusion, the techniques of correlation and step-wise regression have been applied. The district-wise Financial Inclusion Index has been taken as the dependent variable and the selected socio-economic indicators as independent variables to draw conclusions. Among the four variables, except the indicator concerning proportion of working population, the rest all three indicators were found to have significant positive association with the level of financial inclusion. However, urbanization turned out to be the single most important determinant of inter-district variations in financial inclusion in Punjab explaining 53% of the total variations while the three variables together explained 79.2% of the variations in financial inclusion.