Status and determinants of financial inclusion among rural households: An empirical analysis

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Abstract

Several empirical studies have evaluated financial inclusion (FI) at the national level globally. However, limited research exists on household-level FI in Northeast India using a standardized index. This study uses primary data collected from rural households in the Barak Valley region of Assam to assess the level of FI and identify its determinants. the Composite Financial Inclusion Index (CFII) is constructed using multiple dimensions like availability, usage, and quality as prescribed by the Reserve Bank of India (RBI). Binary variables are used to represent qualitative information for the construction of CFII and living standards. A logistic-transformed linear regression model is utilized to identify the key factors that drive FI among rural households. The study found that the level of FI among select rural households is low compared to the national average figure reported by RBI in 2022. The study further identifies income, education, standard of living, and profession as significant determinants of FI among rural households. However, demographic variables like religion have no impact on FI. Policymakers and regulators could use this finding to develop tailored policies. The limited number of household surveys conducted in a small geographical area of the region restricts the generalization of these findings.

Keywords: Financial Inclusion, Living Standard, Income, Barak Valley, Assam, Primary Data

Authors’ individual contribution: Conceptualization — P.D. and B.P.; Methodology — P.D. and B.P.; Software — P.D.; Formal Analysis — P.D. and B.P.; Writing — P.D. and B.P.; Visualization — P.D. and B.P.; Supervision — P.D.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G2, G20, G21, G32

Received: 10.01.2024
Accepted: 04.06.2024
Published online: 07.06.2024

How to cite this paper: Debnath, P., & Paul, B. (2024). Status and determinants of financial inclusion among rural households: An empirical analysis [Special issue]. Corporate Governance and Organizational Behavior Review, 8(2), 295–307. https://doi.org/10.22495/cgobrv8i2sip5