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  • Generating a Financial Inclusion Index

    Hello everyone, I am in dire need of your help, I am trying to generate a Financial inclusion index for 80 countries. I have four variables. I am not proficient at Stata so I would appreciate if anyone could help me with which approach should I take to generate the index. I have data from 2004-2017. Thanks in advance.
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  • #2
    I recommend you look to the relevant literature to investigate what others have done. Generally speaking, however, you might consider various approaches such as taking the average of the four variables or using a principal component analysis (PCA) to see which (if any) of the variable have an underlying relationship. Type 'help pca' in Stata to learn more about such an approach.

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    • #3
      Thank you Chris. I read the relevant literature. They have used PCA approach to calculate the index. I read a paper where they showed globalisation index methodology by giving weights to the variables then taking the average. The paper said they found the weights from the 'principal eigenvectors' using Stata. Can you help me with this? Does it mean the PCA approach? If so, which part of the outcomes is exactly the weights?

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