Enabling Financial Inclusion through Fintech: Bachelor thesis of Banking and Finance / Trần Thiên Phúc; supervisor Ha Thi Thieu Dao

MINISTRY OF EDUCATION TRAINING STATE BANK OF VIET NAM

BANKING UNIVERSITY HO CHI MINH CITY

TRẦN THIÊN PHÚC

ENABLING FINANCIAL INCLUSION THROUGH

FINTECH

GRADUATION THESIS

MAJOR: FINANCE – BANKING

CODE: 7340201

HO CHI MINH CITY, 2021

MINISTRY OF EDUCATION TRAINING STATE BANK OF VIET NAM

BANKING UNIVERSITY HO CHI MINH CITY

TRẦN THIÊN PHÚC

ENABLING FINANCIAL INCLUSION THROUGH

FINTECH

GRADUATION THESIS

MAJOR: FINANCE – BANKING

CODE: 7340201

SUPERVISOR

HẠ THỊ THIỀU DAO Assoc. Prof, PhD

HO CHI MINH CITY, 2021

i

ABSTRACT

Financial inclusion is an issue of global concern with the goal of developing a

financial system that serves all society members, providing appropriate and convenient

services at an affordable cost for all individuals and businesses, contributing to the

country's sustainable development. Indeed, Decision No. 149/QD-TTg highlights the

goal "at least 80% of adults will have bank accounts." dated on 22 January 2020 in

Vietnam. New financial technologies (fintech) are seen as key enablers of financial

inclusion. This study uses probit regression to examine the impact of fintech on

financial inclusion by using the Global Findex database. The study uncovers new

evidence that fintech is a key to enable financial inclusion. The main findings are

fintech (proxy via mobile phone used to use of specific services, mobile phone used to

pay utility bill, mobile phone used to receive the payment, mobile phone ownership)

and other determinants such as the education and income, which have positive and

statistically significant relationship with financial inclusion. Overall, the study's results

offer recommendations to policymakers in Vietnam.

ii

COMMITMENT

This thesis is the author's study. The research results are honest in that there is

no previously published content or other content done by someone else except fully

cited citations in the thesis.

Ho Chi Minh City, ………………………………….

Author

Trần Thiên Phúc

iii

ACKNOWLEDGEMENTS

After four years of studying at the Banking University of Ho Chi Minh City, I

achieved a lot of knowledge and experience from talented, devoted, and enthusiastic

lecturers, who always support students and improve academic development.

Firstly, I would like to express my gratitude to my family, who always

encourage and care for me. My sister has been my wonderful caregiver since starting

my project, and I want to thank her for all the supports she has given me.

Secondly, I cannot thank my supervisor, Hạ Thị Thiều Dao, Assoc. Prof, Ph.D.,

enough for the efforts you have given me to support me to finish the project

successfully.

Finally, last but by no means least, thank you to all my colleagues who has

shared their valuable feedback to complete my publication.

iv

TABLE OF CONTENTS

ABSTRACT......................................................................................................................i

COMMITMENT..............................................................................................................ii

ACKNOWLEDGEMENTS ........................................................................................... iii

CHAPTER 1 INTRODUCTION .....................................................................................1

1.1 RESEARCH MOTIVATION ...........................................................................1

1.2 RESEARCH OBJECTIVE................................................................................4

1.2.1 Overall objective............................................................................................4

1.2.2 Specific objectives.........................................................................................4

1.3 RESEARCH QUESTIONS...............................................................................4

1.4 RESEARCH SUBJECT AND SCOPE.............................................................4

1.5 RESEARCH METHODOLOGY......................................................................5

1.5.1 Regression method ........................................................................................5

1.5.2 Data sources...................................................................................................5

1.6 RESEARCH CONTRIBUTION.......................................................................5

1.7 RESEARCH STRUCTURE..............................................................................6

CHAPTER 2 LITERATURE REVIEW ..........................................................................8

2.1 DEFINITIONS AND MEASUREMENT.........................................................8

2.1.1 Fintech definition...........................................................................................8

2.1.2 The measurement of fintech ........................................................................10

2.1.3 Financial inclusion definition ......................................................................14

2.1.4 The measurement of financial inclusion......................................................15

2.2 REVIEW OF PREVIOUS STUDIES .............................................................17

v

2.2.1 Fintech and financial inclusion....................................................................17

2.2.2 Financial inclusion and other determinants.................................................20

CHAPTER 3 METHODOLOGY ..................................................................................24

3.1 REGRESSION METHOD ..............................................................................24

3.1.1 Binary model ...............................................................................................24

3.1.2 Estimation ....................................................................................................25

3.2 TESTING ........................................................................................................27

3.2.1 Wald test ......................................................................................................27

3.2.2 The Lagrange multiplier or score test..........................................................28

3.3 RESEARCH DATA........................................................................................29

3.4 RESEARCH MODEL.....................................................................................30

CHAPTER 4 RESULTS AND DISCUSSION..............................................................33

4.1 FINANCIAL INCLUSION AND FINTECH .................................................33

4.1.1 Financial inclusion.......................................................................................33

4.1.2 Fintech .........................................................................................................33

4.2 FINANCIAL INCLUSION AND OTHERS DETERMINANTS IN VIETNAM..........34

4.2.1 Financial inclusion and gender....................................................................34

4.2.2 Financial inclusion and income ...................................................................35

4.2.3 Financial inclusion and education ...............................................................36

4.3 EMPIRICAL RESULTS .................................................................................37

4.3.1 Statistics.......................................................................................................37

4.3.2 Testing results..............................................................................................38

4.3.3 Discussion....................................................................................................38

CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS ..................................45

5.1 CONCLUSIONS.............................................................................................45

5.2 RECOMMENDATIONS ................................................................................48