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Abstract

This paper builds a financial inclusion index of thirty-three provinces in Indonesia from formal financial institutions banks. It aim at analyzing how the financial inclusion index relates to regional poverty using a spatial panel econometric approach. Findings/Originality: The results show that the average financial inclusion index of each province in Indonesia is still in a low category, and there is a financial system development inequality between DKI Jakarta Province and other regions. We also find that poverty has a significant negative effect on the financial inclusion index. With the recent migration of residents as a spatial weighting matrix, we decompose the global effect of the poverty variable on the financial inclusion index into a local effect for each province.

Keywords

financial inclusion index poverty spatial panel econometrics

Article Details

Author Biography

Iwan Fathi Fauzan, Statistics Indonesia, Jakarta, Indonesia

Directorate of Financial, Technology Information, and Tourism Statistics, BPS
How to Cite
Fauzan, I. F., Firdaus, M., & Sahara, S. (2020). Regional financial inclusion and poverty: Evidence from Indonesia. Economic Journal of Emerging Markets, 12(1), 25–38. https://doi.org/10.20885/ejem.vol12.iss1.art3

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