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Financial inclusion in the digital banking age: Lessons from rural India

Published online by Cambridge University Press:  07 December 2021

RAM A. CNAAN Open the ORCID record for RAM A. CNAAN [Opens in a new window] ,
MARQUISHA LAWRENCE SCOTT ,
H. DANIEL HEIST  and
M. S. MOODITHAYA
RAM A. CNAAN
Affiliation:
University of Pennsylvania, School of Social Policy and Practice, Kyung Hee University Graduate Institute of Peace Studies, Seoul, Philadelphia, South Korea email: cnaan@upenn.edu
MARQUISHA LAWRENCE SCOTT
Affiliation:
University of Denver, Graduate School of Social Work, Denver, USA, email: Marquisha.Scott@du.edu
H. DANIEL HEIST
Affiliation:
Brigham Young University, George W. Romney Institute of Public Service and Ethics, email: dan_heist@byu.edu
M. S. MOODITHAYA
Affiliation:
Nitte University, Mangalore, India, email: directorgi@nitte.edu.in
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Abstract

In the digital age, financial inclusion continues to be connected to social inclusion. While most personal financial transactions are shifting from cash currency to digital transactions, we must ensure that marginalized members of society are not unbanked and excluded from financial opportunities. Many countries are declaring their intention to transform to cashless societies. India is one such country. As a case study, we investigated rural Indian villages that declared themselves as cashless to assess the financial reality of villagers. We conducted a survey of households (N=3,159) within villages across seven Indian states. In each state, we studied a village that was officially declared cashless and a nearby comparison village. Our findings suggest that the comparison villages did as well as the cashless villages, as financial inclusion via digital banking was minimal to nonexistent. Alongside significant state variations, we found that financial literacy and online access were the best predictors of performing any digital banking activity. This study concludes with a warning against rushing toward digital banking and the formation of cashless societies, as marginalized populations may be excluded.

Keywords

Financial inclusionfinancial literacydigital bankingexploitationrural villagesIndia
Type
Article
Information
Journal of Social Policy , Volume 52 , Issue 3 , July 2023 , pp. 520 - 541
Copyright
© The Author(s), 2021. Published by Cambridge University Press

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