Published Paper


Assessing Financial Inclusion in Bangladesh: A Comprehensive and Inclusive Measurement

Md. Main Uddin Ahammed . Ahm Ziaul Haq Md Shahin Mia Rony Kumar Datta Md. Jahangir Alam Siddikee Md Shamim Hossain
Bangladesh
Page: 96-115
Published on: 2023 December

Abstract

Problem: The measurement of financial inclusion is one of the most important issues in the recent literatures of finance. For ensuring the required financial services for all people and groups by the financial institutions of a country, one of the essential steps is to measure the level of financial inclusion existed in that country. It assists the concerned to take suitable initiatives for bringing all people under formal financial network quickly by realizing the real scenario. But, no earlier studies measure financial inclusion of Bangladesh comprehensively. In Bangladesh, a cursory attention has been given for measuring financial inclusion using various dimensions. In this backdrop, this study measures the financial inclusion of Bangladesh using an improved and comprehensive index. Approach: A comprehensive financial inclusion measurement index has been used to measure financial inclusion level incorporating three dimensions. The dimensions of financial inclusion are access, availability, and usage. This study used twenty-three indicators for measuring financial inclusion under the three dimensions. Time series data ranging from 2004 to 2020 have been employed .Findings: An upper mid-level of financial inclusion had been achieved in Bangladesh with financial inclusion index (FII) value of 0.709 in 2020 (where 1.00 indicates full financial inclusion). It suggests that a significant portion of people are still out of the coverage of formal financial services in the country. It was also found that access to financial inclusion in the country is higher than other two dimensions of financial inclusion, namely, usage and availability. Among three dimensions of financial inclusion, Bangladesh scored high level only in access (0.837) dimension. But mid-level of financial inclusion existed in Bangladesh as per availability (0.640) and usage (0.661) dimensions. The findings indicate that urgent initiatives are to be taken to enhance the availability and usage of financial services for the people. Conclusion: The study provides a wealth of insights and knowledge about access, availability, and usage of financial institutions and their services in Bangladesh that might help policymakers and financial service providers to design and implement better policies to enhance level of financial inclusion in the country.

 

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