Measuring Financial Inclusion: An Axiomatic Approach

Author: 
Satya R. Chakravarty
Rupayan Pal
Description: 
2010 Working Paper Series
JEL codes: 
Abstract: 
This paper clearly demonstrates that the axiomatic measurement approach developed in the human development literature can be usefully applied to the measurement of financial inclusion. A conceptual framework for aggregating data on financial services in different dimensions is developed. The suggested index of financial inclusion allows calculation of percentage contributions of different dimensions to the overall achievement. This in turn enables us to identify the dimensions of inclusion that are more/less susceptible to overall inclusion and hence to isolate the dimensions that deserve attention from a policy perspective. The paper also illustrates the index using cross-country and sub-national level data.