Investigating the Determinants of Financial Inclusion in BRICS Economies: Panel Data Analysis Using Fixed-Effect and Cross-Section Random Effect

The current research empirically analyses the determinants of financial inclusion (FI) for BRICS (Brazil, Russia, India, China and South Africa) nations using the no. of depositors and Automated Teller Machines/user as dependent variables, a proxy for FI from 2004 to 2019. The study employs fixed-effect, cross-section random-effect and simple panel least square techniques to determine FI for different BRICS countries. The empirical findings of fixed effect and cross-section random highlight that population and internet users affirmatively and significantly influence FI. Simple panel least square analysis indicates that domestic credit to the finance sector, population, internet users and bank branches positively influence the no. of depositors in these economies. Gross domestic product (GDP) and domestic credit to private sector (DCPS) inversely affected FI. Results of the second measure of FI (ATM per user) show the exchange rate of domestic credit to the private sector, and GDP positively influences FI. These findings will induce policymakers to take corrective actions by considering the significant factors to boost FI in respective BRICS economies.

Automated summary

This study empirically analyzes the determinants of financial inclusion in BRICS nations from 2004 to 2019, using the number of depositors and Automated Teller Machines (ATM) per user as indicators. The findings suggest that population and internet users have a positive and significant impact on financial inclusion. The analysis also shows that domestic credit to the finance sector, population, internet users, and bank branches positively influence the number of depositors in these economies. Gross domestic product (GDP) and domestic credit to the private sector (DCPS) have a negative impact on financial inclusion. The results for ATM per user indicate that the exchange rate of domestic credit to the private sector and GDP have a positive influence on financial inclusion. These findings will inform policymakers in their efforts to enhance financial inclusion in BRICS economies.