Provincial Financial Inclusion in Turkey: Measurement and Its Spatial Determinants

Abstract

This present study explores the drivers affecting the provincial financial inclusion levels by using data belonging to81 Turkish provinces during 2011 – 2016. After computing the index of financial inclusion for each province, we usedspatial regression methods which control for spatial dependences because Moran’s I statistic and Local Indicatorof Spatial Association (LISA) analysis revealed that there are the spatial spillover and heterogeneity in provincialfinancial inclusion. To cope with the possible endogeneity problems, we estimated the spatial models via SystemGMM estimator. The findings show that “unemployment”, “urban”, “tourism”, “married”, “education”, “inflation” and“crime” variables are the determinants of provincial financial inclusion for Turkey. We also detect a convergence infinancial inclusion levels of provinces.