Bridging the Gap: The Role of Financial Inclusion in Promoting Inclusive Economic Growth

• Author(s): Shivakumara PT
• Paper ID: 1701216
• Page: 439-446
• Published Date: 31-05-2019
• Published In: Iconic Research And Engineering Journals
• Publisher: IRE Journals
• e-ISSN: 2456-8880
• Volume/Issue: Volume 2 Issue 11 May-2019

Abstract

Based on a multitude of empirical studies from India using household data from large scale pan-India datasets such as the All-India Debt and Investment Survey, Financial Inclusion Index and National Sample Surveys, this paper combines strong econometric evidence using fixed-effects panel regressions, instrumental variable methods and difference-in-differences methods that shows that financial inclusion, as measured by variables such as bank account ownership (inclusion), access to credit and use of digital payments and microfinance have a significant positive effect on indicators of?inclusive growth: rural consumption, poverty, female labor force participation, and income inequality where causal effect estimates show that the roll-out of the Pradhan Mantri Jan Dhan Yojana (PMJDY), Aadhaar-linked direct benefit transfers (DBT), and MUDRA loans led to a significant change in financial practices, savings behaviours, and credit access among vulnerable groups, notably among women and rural households evidenced by causal inference methods and large-scale field experiments show that regions that experienced greater financial inclusion growth saw larger gains in per capita income and job creation and at the same time reduced dependence on informal credit and lowered exposure to financial shocks, with such effects being pronounced in states with more developed digital and institutional infrastructure, further confirmed with granular impact evaluations that reveal positive spillover effects between financial literacy, mobile banking adoption and formal credit dependence, thus validating that financial inclusion in India does not work merely as a social welfare tool but is rather a crucial enabler of equitable and sustained economic development which align with the over-arching objectives of inclusive growth and SDGs for that country.

Keywords

Financial Inclusion, Inclusive Growth, Empirical Evidence, Poverty Reduction, Digital Financial Services

Citations

IRE Journals:
Shivakumara PT "Bridging the Gap: The Role of Financial Inclusion in Promoting Inclusive Economic Growth" Iconic Research And Engineering Journals Volume 2 Issue 11 2019 Page 439-446

IEEE:
Shivakumara PT "Bridging the Gap: The Role of Financial Inclusion in Promoting Inclusive Economic Growth" Iconic Research And Engineering Journals, 2(11)