What effect does financial inclusion have on economic development within Sweden, Botswana and India?

Abstract

This study examines the relationship between financial inclusion and income level by identifying three different countries' income levels. It also investigates the differences as well as the similarities between these countries’ to add further knowledge. Data from the World Bank and Financial Access Survey [FAS] over the period 2018 – 2020 period is applied to a two-staged Principal Component Analysis. Six variables that help to explain financial inclusion are divided into three dimensions which contain two variables each. The findings show that Sweden as a high-income country performs best with the highest score of financial inclusion. India with the lowest income level performs second best and thereafter Botswana, as the upper-middle-income country, is the country with the lowest level of financial inclusion. The results suggest that there is a relationship between financial inclusion and income level. However, it also implies that other factors than financial inclusion may have an essential effect on income level depending on the country's condition.