FINANCIAL INCLUSION FOR SELECTED OECD COUNTRIES

Purpose- Financial inclusion is defined as a process that ensures the ease of access, availability, and usage of the formal financial system for all members of an economy by emphasizing the use of accessibility and availability of financial services. A financial sector is measured and compared on four main features; debt is the size of financial institutions, access is the access and use of financial services by the users, efficiency is the efficiency in the provision of financial services, and stability is the stability in the provision of financial services. Financial inclusion, in short, is adults' access to and use of financial services. This study aims to measure the financial inclusion level for selected OECD countries from 2010-2021. Also, this study aims to estimate the effect of financial inclusion on economic growth and income inequality for selected countries. Methodology- The data used in this study cover a range of variables related to financial inclusion from various institutions, including the IMF-Financial Access Survey (IMF-FAS), the World Bank - World Development Indicators (WB-WDI), the World Bank - Global Financial Development Database (WB-GFDD) and the Standardized World Income Inequality Database (SWIID). These variables provide insights into the dimensions and determinants of financial inclusion and their impact on economic and social outcomes for selected OECD countries. In the study, we run panel data regressions for each group separately, using GDP per capita as the dependent variable to determine the impact of the Financial Inclusion Index on economic growth. We also construct two different models for each group of countries with and without the added control variables into the models. Findings- The analysis reveals that the effect of financial inclusion on economic growth is negative for all groups of countries. The impact is significant for Group 1 and Group 2. The magnitude of coefficients changes when we add control variables to the model. However, it does not change the significance level of the coefficients. The magnitude of the coefficients increases as countries’ per capita income increases. At the same time, the effect of financial inclusion on the GINI index is significant only in the model for Group 3 with control variables. The sign of the impact is negative. It implies that the GINI index decreases as the financial inclusion index increases. So, the effect of financial inclusion on income inequality is positive for c