Munich Personal RePEc Archive

Nexus of Financial Inclusion and Economic Growth: Benchmarking the Performance of Indian States

Yadava, Anup Kumar and Singh, Bhanu Pratap and Yadav, Vishal (2021): Nexus of Financial Inclusion and Economic Growth: Benchmarking the Performance of Indian States.

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Abstract

The study evaluates and benchmarks the performance of Indian states considering the proposed multidimensional financial inclusion index (FII) as input and economic growth as an output variable. The HDI methodology of UNDP is adopted in the construction of supply and demand side FII for 27 Indian states for the period 2004 to 2017. The output-oriented DEA models are used in which supply and demand FIIs are used as an input and real gross state domestic product as an output to measure the technical efficiency of the states. The major findings of the study suggest Maharashtra performs at the frontier and benchmarks for all other states in both CRS and VRS DEA models which is consistent with FII indices of the states. Therefore, structural reforms are warranted in the policy framework to improve financial services in poor and low performing states to spur economic development.

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