ABSTRACT
Financial inclusion has become an interesting issue and an important public policy priority following the recent global financial crisis. In Indonesia, government, the banking sector and other related parties have focused on achieving higher rates of financial inclusion through various ways. This article measures the index of financial inclusion in Indonesia covering three dimensions: accessibility, availability, and usage of banking services. To measure the index of financial inclusion, we use a methodology proposed by Sarma (2012). We also attempt to identify the factors – bank-specific variables and macroeconomic factors – that are significantly associated with financial inclusion in Indonesia. Among macroeconomic factors, as expected, income proxy by GDP per capita is positively associated with level of financial inclusion, while bank size and net interest margin also have positive significant effect on financial inclusion in Indonesia
