Search Advanced

Quantitative Finance and Economics

2020, Volume 4, Issue 1: 19-35. doi: 10.3934/QFE.2020002
Previous Article Next Article
Research article

Does financial inclusiveness matter for the formal financial inflows? Evidence from Pakistan

  • Applied Economics Research Centre, University of Karachi, Karachi, Pakistan
  • Received: 12 December 2019 Accepted: 16 January 2020 Published: 19 January 2020

  • JEL Codes: G21, F24, R20, C31, C34

  • The remittance inflows are the major source of financial transfers received by households to maintain their livelihood. However, the formal inflows can play an immense role in improving the indigenous economy by affecting household welfare, these flows further strengthen the economy at micro and macro levels. Previously, various studies found a determinant relationship between supply-side factors and financial inclusion. Whereas, this paper emphasizes a sweltering issue of formal financial inflows in Pakistan especially focusing on the demand side factors on the household level. The analysis uses Heckman Selection Technique to assess the demand for formal financial inclusion which can only be realized for the households receiving remittances, where the determinants for both depend upon the distinctive demographic, individuals and household characteristics. The study appraises household survey data from the Household Integrated Economic Survey (HIES) for the period 2013–2014. The results demonstrate the strong effects of households' demand-side factors on financial inclusion. The demographic features such as education and the highest earner's age are found to have a positive and significant impact on financial inclusion. Whereas, the household characteristics such as household living conditions, asset accumulation, household savings, and borrowings also strongly affect the formal financial inclusive decision. It is therefore suggested to employ a comprehensive policy regarding the enhancement of households' awareness by the spread of formal and financial literacy.

    Citation: Mariam Naz, Syed Faizan Iftikhar, Ambreen Fatima. Does financial inclusiveness matter for the formal financial inflows? Evidence from Pakistan[J]. Quantitative Finance and Economics, 2020, 4(1): 19-35. doi: 10.3934/QFE.2020002

    Related Papers:

  • The remittance inflows are the major source of financial transfers received by households to maintain their livelihood. However, the formal inflows can play an immense role in improving the indigenous economy by affecting household welfare, these flows further strengthen the economy at micro and macro levels. Previously, various studies found a determinant relationship between supply-side factors and financial inclusion. Whereas, this paper emphasizes a sweltering issue of formal financial inflows in Pakistan especially focusing on the demand side factors on the household level. The analysis uses Heckman Selection Technique to assess the demand for formal financial inclusion which can only be realized for the households receiving remittances, where the determinants for both depend upon the distinctive demographic, individuals and household characteristics. The study appraises household survey data from the Household Integrated Economic Survey (HIES) for the period 2013–2014. The results demonstrate the strong effects of households' demand-side factors on financial inclusion. The demographic features such as education and the highest earner's age are found to have a positive and significant impact on financial inclusion. Whereas, the household characteristics such as household living conditions, asset accumulation, household savings, and borrowings also strongly affect the formal financial inclusive decision. It is therefore suggested to employ a comprehensive policy regarding the enhancement of households' awareness by the spread of formal and financial literacy.


    加载中


    [1] Aduda J, Kalunda E (2012) Financial inclusion and financial sector stability with reference to Kenya: A Review of Literature. J Appl Financ Bank 2: 95.
    [2] Allen F, Demirgüç-Kunt A, Klapper L, et al. (2016) The Foundations of Financial Inclusion: Understanding Ownership and Use of Formal Accounts. J Financ Intermed 27.
    [3] Anzoategui D, Demirgüc-Kunt A, Martníez Peraí MS (2011) Remittances and financial inclusion: evidence from El Salvador, The World Bank The authors should interact with the above studies in section 2.
    [4] Camara N, Peña X, Tuesta D (2014) Factors that matter for financial inclusion: Evidence from Peru. The International Journal of Finance, 14/09 Working Paper.
    [5] Collins D, Morduch J, Rutherford S, et al. (2009) Portfolios of the poor: how the world's poor live on $2 a day, Princeton University Press.
    [6] Demirgüç-Kunt A, Klapper LF (2012) Measuring financial inclusion: The global findex database. Policy Research Working Paper 6025, Washington, DC: World Bank.
    [7] Demirguc-Kunt A, Klapper L, Singer D (2013) Financial inclusion and legal discrimination against women: evidence from developing countries (No. 6416), The World Bank.
    [8] Dupas P, Robinson J (2013) Savings constraints and microenterprise development: Evidence from a field experiment in Kenya. Am Econ J: Appl Econ 5: 163-192. doi: 10.1257/app.5.1.163
    [9] Subhani MI, Hasan SA, Osman A, et al. (2011) Plastic Money/Credit Cards Charisma for Now and Then (A Thin Line between Easy Money and Risky Money). Eur J Sci Res 62: 123-127.
    [10] Khurana S, Singh SP (2011) An Analytical Study of Customer's Preferences and Satisfaction in Credit Card Industry. IUP J Bank Manage 10: 71.
    [11] Li JJ, Salinas JC, Ramírez T, et al. (2014) Do remittances foster financial inclusion in Mexico? BBVA Res: Financ Inclusion Econ Watch.
    [12] Mashayekhi M (2013) Maximizing the Development Impact of Remittances. United Nations Conference on Trade and Development UNCTAD. Geneva, Item 3 of the provisional agenda.
    [13] McCloskey A (2014) Financial regulation and the well-being of low-income Americans. American Enterprise Institute for Public Policy Research.
    [14] Munyegera GK, Matsumoto T (2016) Mobile Money, Remittances, and Household Welfare: Panel Evidence from Rural Uganda. World Dev 79: 127-137. doi: 10.1016/j.worlddev.2015.11.006
    [15] Nkwede F (2015) Financial inclusion and economic growth in Africa: Insight from Nigeria. Eur J Bus Manage 7: 2222-2839.
    [16] Orozco M, Porras L, Yansura J (2017) Trends in remittances to Latin America and the Caribbean in 2016. Inter-Am Dialogue.
    [17] Raza SR, Fayyaz M, Syed N (2016) Overview of Financial Inclusion in Pakistan. Int J Manage Sci 6: 572-581.
    [18] Sangmi M (2013) Financial inclusion strategies in developing countries with special reference to India. J Public Adm Financ Law, 97-107.
    [19] Van Rooij MC, Lusardi A, Alessie RJ (2012) Financial literacy, retirement planning and household wealth. Econ J 122: 449-478. doi: 10.1111/j.1468-0297.2012.02501.x
    [20] Wachira MI, Kihiu EN (2012) Impact of financial literacy on access to financial services in Kenya. Int J Bus Social Sci 3.
  • Reader Comments
  • © 2020 the Author(s), licensee AIMS Press. This is an open access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0)
通讯作者: 陈斌, bchen63@163.com
  • 1. 

    沈阳化工大学材料科学与工程学院 沈阳 110142

  1. 本站搜索
  2. 百度学术搜索
  3. 万方数据库搜索
  4. CNKI搜索
Quantitative Finance and Economics
3.2 0.3

Metrics

Article views(3381) PDF downloads(473) Cited by(9)

Preview PDF
Download XML
Export Citation
Article outline

Figures and Tables

Tables(2)

Other Articles By Authors

Related pages

Tools

/

DownLoad:  Full-Size Img  PowerPoint
Return
Return

Catalog