KUALA LUMPUR: Singapore continues to be the most financially inclusive country in the world, while Malaysia ranked 20th, according to the Global Financial Inclusion Index by Principal Financial Services.
According to World Bank, financial inclusion refers to individuals and businesses having access to useful and affordable financial products and services that meet their needs.
The study by the financial services company ranks 41 countries using a comprehensive and comparative evaluation of financial inclusion based on how governments, employers and financial systems promote financial inclusion.
Principal said alongside declining capital and credit availability, there has been a drop in government support in Malaysia.
The report said Malaysia alongside India has been a relative economic beneficiary of China's contraction.
"In recent years it has taken some of China's labour capacity and higher commodity prices have buoyed its export market.
Like the US Malaysia's overall drop in the financial inclusion ranking is not indicative of the market moving backward. Rather, it is a function of an economy and population that required less intervention than others," it said.
According to the study, awareness and uptake of government-mandated pensions and savings fell 13 per cent year-on-year while education levels fell 2.8 per cent in Malaysia.
In terms of percentage of population that feels financially included, Malaysia ranks 8th, above Singapore which ranks 10th.
Singapore tops the index as the most financially incusive market for the third consecutive year, driven by strong performance across the government, financial system and employer pillars.
Hong Kong, South Korea, Switzerland and Sweden were the most financially inclusive after Singapore.
"It's been a challenging year with inflation outpacing wage growth, interest rate hikes, and ongoing market uncertainty. However, even amid these economic pressures, we've seen global financial inclusion improve for the second year in a row, as employers, governments and financial systems continue to collectively increase access to useful and affordable financial products and services," Principal CEO and chairman Dan Houston said in a statement.
"As it became harder for businesses and households to access lending, we have seen how governments and the private sector have stepped up to help societies weather these economic conditions. This has led to levels of financial inclusion continuing to increase around the world." he added.