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Désiré Avom, Chrysost Bangaké and Hermann Ndoya
''Measuring financial inclusion in African countries''
( 2021, Vol. 41 No.3 )
There is no consensus in the literature on how to measure financial inclusion. Previous studies mainly rely on supply-side information to measure the extent of financial inclusion. We contribute to this literature by using a newly created index of overall financial inclusion for 37 African countries for the periods 2011, 2014 and 2017. Our measure comprises four dimensions: access, penetration, usage and barriers. Furthermore, we apply a two-stage principal component analysis (PCA) to assign weight to the dimensions. The proposed index is robust and comparable across countries. It is highly correlated with macroeconomic variables such as GDP per capita, education, institutional quality and consumption.
Keywords: Financial inclusion, Principal component analysis (PCA), Africa
JEL: G2 - Financial Institutions and Services: General
O1 - Economic Development: General
Manuscript Received : Jun 23 2020 Manuscript Accepted : Jul 18 2021

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