Impediments in Use of Financial Services: Evidence from North East India
The Review of Finance and Banking, 2020, vol. 12, issue 1, 7-18
The present study assesses the factors that are significantly related to the use of financial services among the people living in the North-Eastern States of India. This part of the geographical area has a low penetration of banking and financial services as reported in various documents by the regulators. The use of financial services gives a precise picture of the inclusiveness of the financial system. Financial inclusion does not merely mean having a bank account but using that bank account to derive benefits from various financial services. The present study will try to find out the factors acting as impediments towards the use of financial services and affecting the choice of using or not using any such financial services and products. The study is based on the primary data collected using a questionnaire from 1,948 respondents spreading across three states of North East India. Tobit regression analysis is used as the censored regression model to find out the linear relationship between variables affecting the use of financial services. Fitting Tobit regression model, it is found that, the critical factors that are significant towards the use of financial services are financial awareness, economic status of the members, the suitability of financial products, income, education, age of the user and presence of banking correspondents.
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