Derivation of weight for measuring financial inclusion index using a non-parametric analysis approach: A study based on Bihar

Prashant Ranjan () and Akanksha Chaurasia ()

International Journal of Accounting, Business and Finance, 2024, vol. 3, issue 2, 36-48

Abstract: To address the criticism of arbitrary weight selection in current approaches, this paper generates a composite Financial Inclusion (FI) Index to evaluate financial inclusion across 38 districts in Bihar, India, for the financial year 2020–2021. Financial inclusion is assessed through four dimensions: availability, accessibility, awareness, and usage of financial services, incorporating novel indicators such as training programs organized, persons trained, Bank Mitra engaged, and amount accumulated by Bank Mitra. A two-stage Data Envelopment Analysis (DEA) is employed to derive data-driven weights, supplemented by a comparison with the United Nations Development Programme (UNDP) approach, using data from the state-level banker’s committee report. The DEA results reveal that 27 districts are efficient (score of 1), while Sheikhpura scores the lowest (0.2727). The UNDP approach classifies 19 districts as high FI (>0.6), 16 as medium (0.4–0.6), and 3 as low (<0.4), with Patna achieving the highest score (0.940) and Arwal the lowest (0.377). By pointing out areas needing intervention, the proposed FI Index improves policy development and is simple to compute and comparable throughout regions. This study advances a strong, scientifically sound instrument for measuring financial inclusion with possible use in many spheres.

Keywords: Financial Inclusion; Measuring Financial Inclusion; Financial Inclusion Index; Weight Determination; Bihar (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.ijabf.in/index.php/IJABF/article/view/167 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dbs:ijabfi:v:3:y:2024:i:2:p:36-48:id:167

Access Statistics for this article

International Journal of Accounting, Business and Finance is currently edited by Dr. Dharen Kumar Pandey

More articles in International Journal of Accounting, Business and Finance from Indian Accounting Association, Patna Branch
Bibliographic data for series maintained by Indian Accounting Association Patna Branch ().