FINANCIAL INCLUSION AND BANK EFFICIENCY IN THE ASEAN 5+1 REGION: ACCESS, USAGE AND ECONOMIC PARTICIPATION
DOI:
https://doi.org/10.35631/AIJBAF.825006Keywords:
ASEAN 5 1, Bank Efficiency, COVID-19, Data Envelopment Analysis, Financial InclusionAbstract
Financial inclusion can broaden economic participation, but different access and usage channels may affect bank efficiency in different ways. This study examines the relationship between financial inclusion and bank efficiency across 200 commercial banks in six ASEAN economies: Indonesia, Malaysia, Singapore, Thailand, the Philippines, and Vietnam over the period 2013-2021 using an unbalanced panel of 1,500 usable bank-year observations. Bank efficiency is estimated using Data Envelopment Analysis (DEA) under constant and variable returns to scale, while the relationships between nine financial inclusion indicators and technical efficiency are examined using pooled ordinary least squares and bank fixed-effects models with robust standard errors. The findings reveal substantial cross-country differences in bank efficiency, with Thailand recording the highest average technical efficiency and the Philippines the lowest. Among the financial inclusion indicators, ATMs per 100,000 adults, credit cards, debit cards, and outstanding loans are positively associated with bank efficiency, whereas geographical ATM density, branch density, bank accounts, and outstanding deposits show negative associations. These results indicate that financial inclusion does not affect bank efficiency uniformly and that the operational effects depend on the specific channel through which access and usage are expanded. By analysing individual indicators rather than a composite financial inclusion index, this study provides more detailed evidence on how different dimensions of financial inclusion are associated with bank efficiency across heterogeneous ASEAN banking systems during the pre-pandemic and initial COVID-19 period.
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