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Chapter One Introduction
Background
1.1 This topic report on Financial Inclusion was commissioned from GEN Consulting by the Scottish Executive.
1.2 The Scottish Executive Development Department wanted research that would report on financial inclusion issues using data from the Scottish Household Survey ( SHS). This was to be augmented, where appropriate, by other sources in order to inform the development of, and provide an evidence base for, the development of the Executive's financial inclusion policy.
Study Objectives
1.3 The main objectives of the study were to:-
- Undertake an in-depth analysis of data from the SHS dealing with financial inclusion, including examining relationships with other variables not included in the standard SHS reports which may be relevant to financial inclusion (for example access to the internet, health, employment and educational attainment);
- Identify trends in this data, where possible, particularly in the context of the Closing the Opportunity Gap objectives;
- Identify groups who are more likely to be financially excluded (such as single parents and the economically inactive) and explore equalities dimensions (age, gender, ethnic background, religion and disability) and geographic location (urban and rural and areas of deprivation, as measured by the Scottish Index of Multiple Deprivation ( SIMD) 2006);
- Where appropriate, draw upon data from other sources such as the Family Resources Survey in order to further understanding of financial inclusion issues in Scotland;
- Where appropriate, draw on other data sources to set financial inclusion in Scotland within the wider United Kingdom ( UK) and, if possible, the international context; and
- Make recommendations on how gaps or anomalies in the evidence base might be filled.
Methodology
1.4 The methodology for the study included:-
- A policy and literature review of financial inclusion;
- A review of relevant datasets that could support the study;
- Analysis of results from the SHS; and
- The development of financial inclusion benchmarking templates.
1.5 At various stages in the work programme an Advisory Group, set up by the Executive to oversee the study, was consulted (to advise on such things as emerging issues, content and development of the final report). This input proved useful in ensuring that the work both met the objectives of the brief and the expectations of those involved in any implementation.
1.6 The SHS is a continuous survey based on a sample of the general population in private residences in Scotland. It is designed to provide nationally representative samples of private households and of the adult population in private households. This is achieved by splitting the interview between a household respondent and an adult selected at random from the permanent residents of the household. The householder or the spouse/partner of the householder completes Part 1, while Part 2 is completed by one of the adults in the household selected at random. In households with a single adult, the same person completes both parts of the survey ( TNS Social and MORI Scotland, 2005).
1.7 Following advice from the Scottish Executive the study examined household access to, and use of, financial products and services in relation to the socio-economic characteristics of the highest income householder ( HIH) who may or may not be the survey respondent.
1.8 The sample is also designed to provide data for each local authority over a 2 year period. The sample is selected from the small user Postcode Address File for Scotland, expanded to take account of addresses which might only be listed once but actually contain multiple dwellings.
1.9 All data presented for 2005/06 relates to survey responses from 2005 and the first 3 quarters of 2006 as data for the final quarter was not available at the time the study was undertaken. Following discussion with the Advisory Group it was concluded that this would not affect the analysis in a substantial way.
1.10 All data used in analysis was weighted to be representative of Scottish households or of the Scottish adult population. It is made clear in the text if the information presented relates to households or to individuals. Scottish Household Survey weighting factors were applied to data in both instances.
1.11 Results derived from the cross tabulation of SHS variables are all statistically significant at a 95% level, unless otherwise stated in the text or footnotes.
Report Structure
1.12 In order to make sense of the data the approach taken has been to structure the analysis around financial services (for example bank accounts), financial products that are sold by these service providers (such as insurance) and financial management, for example savings and investments.
1.13 The remainder of the report is structured as follows:-
- Chapter 2 outlines the background to financial inclusion and the current policy position;
- Chapter 3 looks at issues around financial services;
- Chapter 4 looks at key issues around financial products;
- Chapter 5 looks at financial management; and
- Chapter 6 draws some conclusions and makes some recommendations
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