D. Spatial dimensions of financial inclusion in the global South

Dr. Cyril Fouillet

Abstract of the research axis

Spatial inequality in the delivery of financial services is an important dimension of inequality in many developing countries: evidence shows increases with liberalisation, economic growth and development. Drawing on economics and geography, this axe of research focuses on the comparative study of spatial dimensions of financial inclusion in the global south.

We will explore this issue in China, India, Madagascar, Morocco and Mexico at two levels of analysis: first at national level with institutional data, and second at the microlevel with material derived from fieldwork to empirically explore the spatial dimensions of institutions of financial inclusion with special attention to rural areas.

Findings about spatial variation and change to financial inclusion are highly relevant to our understanding of the complex processes of regional development underway today, and can contribute to the formulation of innovative regional development policies.


The term ‘financial inclusion’ has been widely employed for at least a decade, both in the discourse of international organisations and by politicians as well as actors involved in this field. For the past fifteen years, a body of literature that documents and monitors financial inclusion has been accumulating (Fuller and Jonas, 2002; Kempson et al., 2004; Copestake, 2007; Howard et al., 2007; Jones, 2008; Hanohan, 2008). Nevertheless, although there is also a large body of literature on spatial analysis in the social sciences, very little research has been done on the spatial distribution and evolution of the delivery of financial services. Yet spatial methods have an important role in enhancing our understanding of the complementarity relationships between alternative and/or informal institutions and the banking system.

Notable contributions are Leyshon (1995), Porteous (1995), Dow (1999), Leyshon et al. (2006, 2008) which have focused on developed countries. Spatial inequalities in the delivery of financial services in developing countries have been neglected to date, despite the major role they play in the process of growing inequality. This post-doctoral research project will attempt to fill this void by integrating recently available data with evidence for institutions derived from fieldwork to explore the spatial dimensions of financial inclusion with special attention to rural areas. We aspire to write an economic geography of monetary and financial practices in the global South.


In this research I pose four objectives - as follows;

  • Objective 1. Produce multidimensional indices of financial inclusion and a range of maps for each country at the district level;
  • Objective 2. Determine financial inclusion dynamics that are at work in rural areas in each respective country and conduct spatial econometric analysis to specify determinants;
  • Objective 3. Through the Local Indicators of Spatial Autocorrelation, identify regional clusters and conduct case-study for research country and make a typology which will help the comparativist analysis;
  • Objective 4. To couple the analysis of institutional ecology of the microfinancial sector in China (in the province of Sichuan) and India (in the State of Andhra Pradesh) with the analysis of the distribution and evolution of financial services and of microfinance institutions in each country and to test spatial econometric models in order to specify the determinants.


To examine these questions and objectives, at the national level, I am compiling relevant and available data in banking, the cooperative sector, microfinance and the rural socio-economy. We will use these data to examine the patterns of financial inclusion and its primary determinants, including the structure of economic activity, political trends, spatial remoteness, and infrastructure using global and local spatial autocorrelation analysis (Moran, 1948; Anselin, 1995), Ordinary Least Squares regression, spatial autoregressive lag and spatial errors models (maximum likelihood estimates). We will develop multidimensional indices of financial inclusion by combining three dimensions: banking penetration, the availability of the banking services and use of the banking system. These dimensions are constructed by combining information on the number of accounts at banks, cooperatives and microfinance institutions for both credit and savings, the number of bank outlets, the number of ATM, GDP data, and adult population.

At the local level our objective is to couple a spatial analysis of the distribution and evolution of microfinance institutions in India and China (for a circumscribed areas; Sichuan and Andhra Pradesh) with an ecology of microfinancial services delivery in these two areas. Two field visits of three weeks each in collaboration with an anthropologist will take place.


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