Development of the Financial Composite Index for MENA Region: A Two-Staged Principal Components Analysis

Mohammad Helmi Bin Hidthir, Ahsan Aslam Khan, Mohd Zukime Mat Junoh, Mohd Faizal Bin Yusof and Zaki Ahmad

SAGE Open, 2025, vol. 15, issue 1, 21582440251320484

Abstract: The present study aims to compute the level of financial inclusiveness in MENA region countries, considering the three fundamental dimensions that impact financial inclusion: depth, accessibility, and usage of financial services. Moreover, this article incorporates digital payments-related indicators, credit and debit cards, total borrowers, savers, and other indicators to create a more comprehensive financial inclusion index. A two-step PCA methodology with endogenous weighting is employed to develop the financial inclusion index. The data was collected from the IMF and the World Bank from 2010 to 2021. The resulting composite financial inclusion index (FI Index) can be compared across other countries in the MENA region over time, providing a valuable tool for policymakers and evaluators. The two-stage PCA approach implemented in this study addresses the issue of random weight selection and results in a more comprehensive evaluation of the degree of financial inclusion. In summary, this research enhances our understanding of financial inclusion in MENA region countries and offers a methodology to gauge and monitor progress.

Keywords: financial inclusion; index; MENA region; measuring financial inclusion; principal components analysis (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/21582440251320484 (text/html)

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:sae:sagope:v:15:y:2025:i:1:p:21582440251320484

DOI: 10.1177/21582440251320484

Access Statistics for this article

More articles in SAGE Open
Bibliographic data for series maintained by SAGE Publications ().