Determinants of financial inclusion in rural India: does gender matter?

Purpose Since finance is an efficacious instrument for economic development, social inclusion and women empowerment, the present paper examines the determinants of accessing institutional and non-institutional finance across male- and female-headed households in rural India. Design/methodology/approach Multinomial logistic regression is applied for categorizing households' accessing finance in four categories, namely Only Institutional Finance (IF), Only Non-institutional Finance (NIF), Both Sources of Finance (BF) and Neither Source of Finance (N). Both household and state-level determinants have been analysed. Household data set is sourced from the Situation Assessment Survey (NSSO, 70th round) and state-level data sets from Basic Road Statistics 2016, Agricultural Statistics at a Glance 2016, Rainfall Statistics of India 2014, database on Indian Economy RBI and Census 2011. Econometric regressions have been evaluated for female-headed households (FHHs), male-headed households (MHHs) and overall pooled households (HHs). Findings Four important findings emerge. First, FHHs have a lower probability of accessing IF and a higher probability of accessing NIF vis-a-vis MHHs. Second, in general, education levels, monthly household consumption expenditure, land size holding, irrigated area and penetration of scheduled commercial banks favourably influence FHHs accessing IF. Third, FHHs belonging to socially disadvantaged castes have a lower probability of accessing IF. Fourth, a substantial proportion of FHHs accesses neither IF nor NIF relative to MHHs. Practical implications The paper thoroughly addresses the issue of accessing finance by FHHs and MHHs, which will further assist policymakers in formulating holistic financial policies for rural India. Social implications The paper recommends increasing women's access to financial services as an effective tool for reducing poverty and lowering income inequality in rural India. Originality/value This article contributes to the scant empirical literature on finance and gender.