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Submitted
December 23, 2019
Accepted
January 10, 2020
Published
April 8, 2020
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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

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Economic Journal of Emerging Markets by Center for Economic Studies, Universitas Islam Indonesia is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

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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