22. UN SDG Indicators 8.10 for Measuring Financial Inclusion: An Assessment

Financial inclusion is an essential pre-condition for sustainable economic development and poverty alleviation. Sub-target 8.10 of the Sustainable Development Goal (SDG) of the United Nations (UN) emphasizes expanding “access to financial services like banking, insurance and financial services for all.” To take stock of countries’ progress in this sub-target, UN proposed using a set of three indicators: number of commercial bank branches and automated teller machine (ATM) per 100,000 adults (indicators 8.10.1 (a) and (b), respectively) and the proportion of adults with an account at a bank, other financial institution, or with a mobile-money service provider (indicator 8.10.2). This chapter examines these indicators and presents an assessment of whether they sufficiently capture the inclusiveness of a financial system as envisaged under SDG sub-target 8.10. Considering the existing literature on multidimensionality of financial inclusion, it is argued that this limited set of indicators are inadequate and methodologically insufficient. Additional indicators are proposed to augment the set. Further, a multidimensional Index of Financial Inclusion (IFI) is proposed as a measure of financial inclusion.