Development of financial inclusion from the standpoint of ensuring financial stability
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Author(s)Аngela KuznyetsovaLink to ORCID Index: https://orcid.org/0000-0003-3590-7625
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Іryna BoiarkoLink to ORCID Index: https://orcid.org/0000-0003-0690-2251
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Мyroslava KhutornaLink to ORCID Index: https://orcid.org/0000-0003-0761-3021
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Yuliia ZhezherunLink to ORCID Index: https://orcid.org/0000-0001-8200-730X
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DOIhttp://dx.doi.org/10.21511/pmf.11(1).2022.03
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Article InfoVolume 11 2022, Issue #1, pp. 20-36
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228 Downloads
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Creative Commons Attribution 4.0 International License
Since 2013–2015, financial inclusion has been considered a determinant of economic and social inclusion. Meanwhile, the impact of financial inclusion on economic development directly depends on financial stability. This paper focuses on the development peculiarities of financial inclusion in relation to ensuring financial stability and provides recommendations to Ukraine.
The inclusive development theory and gap theory form the theoretical research base, while generalization, statistical methods, coefficient and graphical analysis, comparison and ranking represent its methodological basis. Financial institution development, financial literacy, income level, cashless economy, and public confidence have been justified as the content-forming factors and impact channels of financial inclusion on financial stability. The development peculiarities of financial inclusion are studied by cross-country analysis considering different financial system models and economic development levels. The weak points of financial inclusion in Ukraine are a sevenfold gap between the banks’ assets and non-bank financial institutions and 37% of the unbanked adult population. Moreover, there is a significant gap between the levels of human capital readiness and information security of banks’ digitalization compared to EU banks – by 2.5 and 1.3 times, respectively, and a critically high level of distrust in banks (70%) with a reasonably high share of payment applications users (58%).
Further developing of financial inclusion and ensuring financial stability in Ukraine requires improving credit cooperation by transforming its structure from multi-institutional to mono-institutional and introducing the developed indicative tools for monitoring potential financial stability threats caused by technological innovations.
Acknowledgment
The study has been conducted within the framework of Applied Research “Ensuring financial stability of the financial sector of Ukraine’s economy on the basis of sustainable development and in the face of the latest epidemiological challenges” with the financial support of the Ministry of Education and Science of Ukraine (state registration number 0121U113271). The authors are also thankful to the editors and anonymous reviewers for their useful suggestions and comments to improve the quality of this paper.
- Keywords
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JEL Classification (Paper profile tab)G20, I30, G21
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References58
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Tables5
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Figures7
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- Figure 1. The number of credit unions and banks in the United States in 2004–2020
- Figure 2. Number of non-bank financial institutions and banks in Ukraine in 2015–2020
- Figure 3. Number of ATMs and terminals in Ukraine in 2015–2020
- Figure 4. Poverty level and domestic credit to the private sector in Ukraine in 2000–2020, %
- Figure 5. Classification of digital banks
- Figure 6. Index of readiness for digitalization of banks in Ukraine and the EU in 2020, %
- Figure 7. The dynamics of the number of non-cash payments in the EU in 2016–2020, mln pcs.
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- Table 1. Evolutionary transformation of financial stability in the financial sector
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- Table 4. The top 10 richest and poorest countries in Europe in 2020
- Table 5. Potential threats and indicators for monitoring the importance of FinTech development in the context of ensuring financial stability of the financial sector
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Measuring the inclusiveness of international financing to tourism in Latin America and the Caribbean
Isabel Carrillo-Hidalgo ,
Juan Ignacio Pulido-Fernández
doi: http://dx.doi.org/10.21511/imfi.15(3).2018.02
Investment Management and Financial Innovations Volume 15, 2018 Issue #3 pp. 15-34 Views: 2199 Downloads: 214 TO CITE АНОТАЦІЯGlobally, tourism has been identified as a means of poverty reduction and development, and as a means of encouragement of females, minorities and small businesses to better engage in the mainstream of economic life. This paper examines whether the international and governmental financial support, grated by international financial institutions, is effectively achieving these aims in Latin America and the Caribbean. A series of indices are established in the paper that assess the extent to which such funding includes non-corporate enterprise while also considering the volume and nature of such funding. It is concluded that the goals of inclusiveness are not being met.
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The role of financial inclusion in financial stability: lesson from Jordan
Mohammad O. Al-Smadi
doi: http://dx.doi.org/10.21511/bbs.13(4).2018.03
Banks and Bank Systems Volume 13, 2018 Issue #4 pp. 31-39 Views: 2073 Downloads: 353 TO CITE АНОТАЦІЯThis study aims to examine the relationship between financial inclusion and financial stability in Jordan by using Fully Modified Least Squares (FMOLS) technique. The analysis is based on time series from 2006 to 2017. Jordanian financial inclusion index is developed to assess the level of financial inclusion, whereas financial stability was measured by Jordanian financial stability index proposed by Central Bank of Jordan. The results show a weak significant and positive impact of financial inclusion on the financial stability in Jordan. Additionally, five control variables are used in the study. The results show a negative impact of domestic credit to private sector, income inequality, financial integration, and global financial crisis on financial stability. In contrast, real GDP per capita has a significant and positive impact. It is expected that the findings of the study can be used by policy makers and supervising authorities to realize the objectives of the national strategy of financial inclusion in Jordan.
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Justification of the list of indicators financial stability of the banking system
Nataliia Pohorelenko
doi: http://dx.doi.org/10.21511/ed.17(3).2018.01
The generalization of scientific approaches to the assessment of the financial stability of the banking system has demonstrated the multivariance of views on structuring and listing of financial stability indicators and has made it possible to distinguish three main ones: on the basis of macroeconomic and macro financial indicators; on the basis of separate indicators; based on synthetic indicators. It is proved that the latter is most effective since the large number and variability of financial ratios used by different authors to assess the level of financial stability of banking systems does not allow for unambiguous results. A hierarchic structure of indicators of the stability of the banking system is proposed, which is characterized by the simultaneous existence of a certain number, not ordered in a heterarchic manner. In accordance with it, the integral index of financial stability of the banking system includes subindices: stability of the NBU, stability of system banks, banks with foreign capital, banks with private capital, financial vulnerability of the banking system. The expediency of accounting for the indicators of financial risk assessment: credit, liquidity risk, interest rate, investment risk, unstable resource base risk, which are characterized by such financial ratios as part of provisions for depreciation of loans in the loan portfolio, is justified in the composition of such a synthetic indicator of the financial stability of the banking system; the norm of instant liquidity; net interest margin; part of the provision for depreciation of securities in the securities portfolio; coefficient of instability of the resource base. Also, indicators for assessing the stability of the central bank were proposed: indicators of the adequacy of reserves; indicators of the effectiveness of monetary policy; indicators of the effectiveness of foreign exchange regulation; indicators of compliance of banking supervision with the main principles of efficiency. This approach will allow taking into account all the structural components of the banking system in the process of assessing financial stability, on the one hand, and in time to identify potential threats to the loss of stability, on the other.
