Regional financial inclusion and poverty: Evidence from Indonesia

Iwan Fathi Fauzan (), Muhammad Firdaus () and Sahara Sahara ()

Economic Journal of Emerging Markets, 2020, vol. 12, issue 1, 25-38

Abstract: This paper builds a financial inclusion index of thirty-three provinces in Indonesia from formal financial institutions banks. It aim at analyzing how the financial inclusion index relates to regional poverty using a spatial panel econometric approach. Findings/Originality: The results show that the average financial inclusion index of each province in Indonesia is still in a low category, and there is a financial system development inequality between DKI Jakarta Province and other regions. We also find that poverty has a significant negative effect on the financial inclusion index. With the recent migration of residents as a spatial weighting matrix, we decompose the global effect of the poverty variable on the financial inclusion index into a local effect for each province.

Keywords: financial inclusion index; poverty; spatial panel econometrics (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:uii:journl:v:12:y:2020:i:1:p:25-38:id:14210

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