Exploring the socio-economic attributes of financial inclusion in India: a decomposition analysis

• Published in: International journal of social economics Vol. 50; no. 7; pp. 941 - 955
• Main Authors: Sethy, Susanta Kumar, Mir, Tariq Ahmad, Gopinathan, R., Joshi, D. P. Priyadarshi
• Format: Journal Article
• Language: English
• Published: Bradford Emerald Publishing Limited 03.07.2023; Emerald Group Publishing Limited
• Subjects: Attributes; Banking; Decomposition; Economic factors; Economic growth; Financial inclusion; Financial institutions; Financial literacy; Financial services; Gender; Gender inequality; Marital status; Methods; Prime ministers; Principal components analysis; Proximity; Regional variations; Religion; Rural areas; Sociodemographics; Socioeconomic factors; Variables; India; Financial institution; Unified payment interface; Fairlie decomposition; Financial inclusion; Financial services
• ISSN: 0306-8293; 1758-6712
• DOI: 10.1108/IJSE-08-2021-0451

PurposeThis paper examines India's socio-economic attributes and different financial dimensions of financial inclusion (FI).Design/methodology/approachThe paper uses a principal component analysis (PCA) to build indexes related to financial dimensions. It applies the logistics regression model and the Fairlie decomposition method to determine India's socio-economic and financial characteristics of FI.FindingsBased on the logistic regression, socio-economic factors like age, gender, marital status, level of education and religion have an impact on FI. The use of financial institutions has positively contributed to the probability of FI, while the low proximity of financial service providers retards the process of FI. Fairlie decomposition concludes regional disparity and gender disparity in FI; however, the rural–urban gap in FI is not captured by the variables included in the study. The main reasons for the discrepancy are lack of education, financial literacy, the proximity of financial service providers and lack of financial institutions.Originality/valueThis paper makes two important contributions: first, it presents a micro-level analysis of FI across the socio-demographic strata of India, and second, it demonstrates the regional, rural–urban and gender disparity in FI in India.