The Nexus Among Finacial Inclusion and

Human Development as Important Role in

ASEAN Economic Growth

Zainuri, Agus Mahardiyanto, Tyas Arthasari,

Mohammad Saleh, Moehamad Fathorrazi
RESEARCH BACKGROUND
1. the 2008 crisis due to subprime mortgages that created a credit bubble in the US, the
event of the bursting of the credit bubble gave a negative domino effect on the banking
sector
2. ASEAN countries responded to the phenomenon of the 2008 financial crisis through
monetary and fiscal control. On the fiscal side, ASEAN countries by increasing export
activities and opposing protectionism. On the monetary side, the IMF increase banking
capital reserves to overcome the 2008 financial crisis and set a macroprudential
framework as a sub-plemental banking policy
3. The implementation of inclusive finance is able to increase social and economic inclusion,
the implementation of an inclusive financial system is able to overcome economic
problems to social gaps in society
4. Financial inclusion is not only carried out by conventional banks but also Islamic banking
where the driving force is Indonesia and Malaysia
PROBLEM STATEMENT
This study focuses on the nexus between financial inclusion and
the human development index in developing countries in
ASEAN, besides this research will see how the relationship
between financial inclusion, HDI, banking performance in the
country's economic growth
METHODOLOGY
1. This research is quantitative research with secondary data, then measured through
mathematical or computational statistical techniques, The Secodary data was obtained
from: the world bank, St. FRED and the International Monetary Fund (IMF).
2. 2010-2020 was chosen as the vulnerable year of research because there are economic
phenomena that have a significant impact on the ASEAN economy, including the 2008
financial crisis, British exit (brexit) to the COVID-19 pandemic.
3. Financial inclusion will be measured through indicators of access and availability. Economic
growth as the dependent variable will be measured through the GDP of the country
concerned, banking performance will be proxied using banking capital assets and HDI will
be proxied using HDI scores for each country.
4. The research object focuses on 7 developing countries in ASEAN: Indonesia, Malaysia,
Thailand, Myanmar, Cambodia, Philippines and Brunei Darussalam
5. This study uses the Generalized Method of Moment (GMM) model
 METHODOLOGY

The following is the equation of the GMM model due to the inclusion
of instrument variables in the model.
  𝐺𝐷𝑃𝑔𝑟𝑜𝑤𝑡ℎ𝑖𝑡 = 𝛼𝑖𝑡 + 𝐿𝑜𝑔𝐷𝑃𝑎𝑐𝑐𝑜𝑢𝑛𝑡𝑖𝑡 + 𝐿𝑜𝑔𝐴𝑇𝑀𝑖𝑡 + 𝐻𝐷𝐼𝑖𝑡 + 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑖𝑡
+ 𝐺𝐷𝑃𝑔𝑟𝑜𝑤𝑡ℎ𝛼𝑖𝑡−1 + 𝜀𝑖𝑡
RESULT (Unit Root Result)
Variable Level   First Difference   Second Difference  

  Desc.  
Levin, PP-Fisher Levin, Lin PP-Fisher Levin, Lin PP-Fisher
Desc. Desc.
Lin & & Chu t* & Chu t*
Chu t*

LogDPaccount 0,1666 0,3894 Unstationary 0,0505 0,0389 Unstationary 0,0000 0,0000 Stationary

LogATM 0,0000 0,0000 Stationary 0,0000 0,0669 Unstationary 0,0000 0,0000 Stationary

HDI 0,0000 0,0000 Stationary 0,0000 0,0000 Stationary 0,0000 0,0000 Stationary

GDP growth 1,0000 0,9258 Unstationary 0,3045 0,1193 Unstationary 0,0000 0,0000 Stationary

Capital Asset 0,0014 0,4808 Unstationary 0,0000 0,0000 Stationary 0,0000 0,0000 Stationary
(Validity Instrument Test Result)
Metode Probabilitas

(J-Statistic)

Hipotesis Null (Ho) : Condition of Moment Valid

Sargan Spesification test 8,1E-22

RESULT (Causality Test Result)
F-Statistic Probability

LOGATM does not Granger Cause HDI 1,67666 0,2006

HDI does not Granger Cause LOGDPACCOUNT 31,2956 7,00E-07

HDI does not Granger Cause LOGATM 25,259 5,00E-06

LOGATM does not Granger Cause HDI 1,67666 0,2006

RESULT (Generalized Method of Moment Test Result)
Variabel Nilai

  Koef. -0,034826
LogDPaccount t-stat. -0,17013

Prob. 0,8657

  Koef. 1,234513
LogATM t-stat. 2,518292

Prob. 0,0153

  Koef. 3,280744
Human Development Index t-stat. 2,24786

Prob. 0,0294

  Koef. 0,173646
Capital Asset t-stat. 0,177092

Prob. 0,8602
DISCUSSION
1. Nexus Financial Inclusion Index and Human Development: there is a positive direction of
linkage between the two variables, as the most important index in economic development,
of course, finance and development must go hand in hand in order to achieve the target of
community welfare. the development of inclusive finance is hoped that able to provide
access services for more people so that the majority of the community
2. ATM and Economic Growth: The increase in ownership and use of ATMs will facilitate the
process of circulating money between communities, especially for millennials who have a
high consumption pattern. the consumption pattern of the community will have a fairly
large proportion of national income, with the convenience provided in transactions, it is
hoped that the existence of an ATM will encourage public consumption in a country
3. Human Development and Economic Growth: Elistia and Syahzuni (2018) reveal that the
existence of economic growth will encourage a high level of human development, and vice
versa, the existence of a high quality community development index will increase the
opportunities for economic growth in a country
CONCLUSION
1. This study concludes that the relationship between the financial inclusion index and human
development is positively insignificant, the direction of the relationship is positive which
indicates there is an alignment of directions between variables
2. the Generalized Method of Moment analysis method, the ATM Log variable has a significant
positive effect on GDP growth in ASEAN-7, meaning that an increase in ownership and use
of ATMs by the community will increase economic growth in 7 ASEAN countries. The Human
Development Index has a significant positive effect on GDP growth in ASEAN-7, meaning
that the higher the quality of society, the more positive the economy will be.
3. Overall, the concept of inclusive finance can be implemented efficiently to increase
economic development in order to achieve optimal community welfare despite the fact that
ASEAN banks still have problems with NPLs is too high, so that further attention is needed
on the concept of prudence in the process of increasing the implementation of financial
inclusion indicators
THANK YOU