Financial Inclusion and Inclusive Development in Indonesia

Financial inclusion, defined as the proportion of individuals and firms making use formal financial services, has become a central theme in discussions about how to achieve so-called inclusive development. Inclusive development refers striving for equal all individuals, particularly including marginalized (that is very poor) groups. According many, inclusion plays an important role achieving Unequal access services can exclude people from process economic growth. This chapter studies process, taking cross-country perspective South East Asia well interregional using data Indonesia. We first develop conceptual model, linking operationalized bank branch access, Based on this empirical part our analysis consists three sections. First, we Asian comparison enrich understanding main patterns Second, turning case Indonesia, discuss processes restructuring regionalization banking sector. These have led substantial changes nonurban areas. Third, provide econometric evidence relationship between regional branches development, demonstrating that associated with per capita output at provincial level. The Indonesian relies panel regression 33 provinces over 5 years (2011–2015). find significantly positively level controlling general circumstances region. results suggest there definite challenge government shift approach toward growth through inclusion. finding may help developing targeted interventions aimed increasing coverage