Territorial inequalities in financial inclusion: A comparative study between private banks and credit unions

Abstract

This research evaluates financial inclusion and territorial inequalities comparing private banks and alternative financial institutions of the social and solidarity-based economy of Ecuador (provinces-level), between 2015 and 2018. Applying Principal Component Analysis, a synthetic index of financial inclusion was constructed using indicators that capture the dimensions of access, use and extent of financial services. A non-hierarchical cluster analysis was also performed to classify Ecuadorian provinces on terms of high, low, and medium multidimensional poverty and rurality. The obtained results indicate the existence of territorial inequalities in the access and use of financial services. We conclude that the credit unions produce a greater level of financial inclusion in disadvantaged territories of Ecuador, in contrast to the private banks that show high levels of financial inclusion in the provinces with a higher socioeconomic status.