Measuring Financial Inclusion by Using the Multidimensional Index Approach in Selected Asian Countries

Abstract

This study measures financial inclusion by using the multidimensional index approach in selected Asian countries. We used two new indices for the first time: (i) financial institution access for investigating the ease and availability of financial services; and (ii) technological innovation index for the usage of financial services with available technology. We also introduced a new dimension for the financial inclusion index by incorporating insurance and financial services. The annual balanced panel data of 25 Asian countries from 2004 to 2020 were used. Overall, the results of all three indices showed that the selected Asian countries are performing well within available resources. Israel is at the top of the financial inclusion index, whereas Cyprus and Lebanon lead the financial institution access and technological innovation indices, respectively. Contrary, Myanmar is at the bottom of all three indices. Several policy suggestions are also provided to increase the level of financial inclusion.