IMPEDIMENTS TO FINANCIAL INCLUSION IN SOUTH ASIA: A MICRO-LEVEL ANALYSIS FROM THE GLOBAL FINDEX 2021

Abstract

This study examines the determinants of financial inclusion in South Asia using micro-level data from the Global Findex 2021, covering 8,009 individuals across six countries (excluding Bhutan and Maldives). Focusing on eight distinct barriers to account ownership, logistic regression models were employed, with marginal effects estimated to assess the likelihood of reporting each impediment across individual characteristics. The findings show that women face greater barriers due to higher perceived costs, trust issues, and reliance on shared family accounts, underscoring the need for gender-sensitive policies. Education and income significantly improve financial access, with higher attainment reducing mistrust and religious concerns. Younger individuals report fewer documentation barriers but greater dependence on family accounts, while trust issues decline with age. Urban residents enjoy better access but face higher costs, and digital resources such as mobile and internet reduce access-related obstacles though not trust-related ones. Resilient individuals are more financially engaged but still rely on family-level management. Overall, the study emphasizes the importance of addressing documentation hurdles, affordability, and institutional trust while promoting financial literacy and digital access, particularly for women, low-income groups, and those with limited education, to strengthen inclusive financial systems in South Asia.

Keywords: Financial inclusion, Formal saving, Formal borrowing, Unbanked individuals, South Asia