A FINANCIAL INCLUSION INDEX FOR INDONESIA

Authors

Hilman Hanivan, Statistics Indonesia, IndonesiaFollow
Nasrudin Nasrudin, Statistics Indonesia, IndonesiaFollow

Document Type

Article

Abstract

Numerous studies have constructed financial inclusion indexes for Indonesia, using amultidimensional approach. However, there is a problem with the methodology, whichassumes that all the dimensions play the same role in defining financial inclusion,since they are based on equal weighting criteria. This paper aims to obviate concernswith the methodology by developing a more empirically based index, namely, aweighted multidimensional index of financial inclusion based on two-stage principalcomponent analysis. In other words, we endogenize the weights. We find that usage isthe most important dimension in defining financial inclusion in Indonesia, followedby availability and access.

Recommended Citation

Hanivan, Hilman and Nasrudin, Nasrudin (2019) "A FINANCIAL INCLUSION INDEX FOR INDONESIA," Bulletin of Monetary Economics and Banking: Vol. 22: No. 3, Article 6.
DOI: https://doi.org/10.21098/bemp.v22i3.1056
Available at: https://bulletin.bmeb-bi.org/bmeb/vol22/iss3/6

First Page

351

Last Page

366

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Indonesia

Affiliation

Statistics Indonesia