The Influence of Financial Inclusion on the Human Development Index in Indonesia, 2017-2019

Abstract

Financial inclusion refers to the expansion of accessible and unobstructed financial services, which are the entitlements of all individuals, particularly marginalized and low-income populations. Facilitating access to banking services that are convenient, economical, secure, and tailored to individual needs would enhance overall welfare. Enhancing financial inclusion is anticipated to promote an elevation in the Human Development Index. This study seeks to assess the impact of financial inclusion on the Human Development Index in Indonesia, utilizing the penetration and usability dimensions as independent factors and the Human Development Index as the dependent variable. This study employs a quantitative descriptive methodology utilizing regression analysis of panel data from 34 Indonesian provinces for the years 2017 to 2019, processed using the Eviews9 software. This research indicates that: (1) the penetration dimension positively and significantly affects the Human Development Index across 34 provinces in Indonesia, (2) the usability dimension positively and insignificantly influences the Human Development Index across 34 provinces in Indonesia.