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Cited by 341Microfinance and Financial InclusionEconomic Growth and DevelopmentMonetary Policy and Economic Impact

Financial inclusion and economic growth linkage: Some cross country evidence

Sethi, Dinabandhu, Acharya, Debashis·2018·Journal of Financial Economic Policy
DOI 10.1108/jfep-11-2016-0073
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Abstract

Purpose The purpose of this paper is to assess the dynamic impact of financial inclusion on economic growth for a large number of developed and developing countries. Design/methodology/approach This study uses some panel data models such as country-fixed effect, random effect and time fixed effect regressions, panel cointegration, and panel causality tests to examine the linkage between financial inclusion and economic growth. Panel cointegration is being used to test the long run association between financial inclusion and economic growth, whereas panel causality test is used to find the direction of causality between financial inclusion and economic growth. The data on financial inclusion are taken from Sarma (2012) for the period 2004-2010. Findings The empirical findings reveal that there is a positive and long run relationship between financial inclusion and economic growth across 31 countries in the world. Further, panel causality test shows a bi-directional causality between financial inclusion and economic growth Thus, the study confirms that financial inclusion is one of the main drivers of economic growth. Research limitations/implications This study has two limitations. First, this study considers only banking institutions in the analysis. Second, the period tested for the long run relationship is not long enough. Practical implications This study empirically measures the quantitative impact of financial inclusion policies pursued across the world. The study also suggests that policies emphasizing financial sector reforms in general and promoting financial inclusion in particular shall result in higher economic growth in the long run. Originality/value This study attempts to assess the long run relationship between financial inclusion and economic growth with the help of a multidimensional index of financial inclusion. Therefore, this can be a valuable contribution to the banks and policymakers.

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Authors
Sethi, D., & Acharya, D.
Affiliations
University of Hyderabad (IN)
ORCID
Venue
Journal of Financial Economic Policy
Publisher
Emerald
Published
2018-06-08
Volume
10
Issue
3
Pages
369-385
ISSN
1757-6385 (ISSN-L)
DOI
10.1108/jfep-11-2016-0073
OpenAlex
W2807593925
Cited by
341
References
62
Citations by year
2026: 28 · 2025: 45 · 2024: 73 · 2023: 70 · 2022: 57 · 2021: 36 · 2020: 20 · 2019: 11 · 2018: 1
FWCI
25.89
Type
journal article
Language
en
Open access
closed
Licence
www.emerald.com/insight/site-policies (tdm)
Locations
Journal of Financial Economic Policy (publishedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Microfinance and Financial Inclusion
  • Physical Sciences › Computer Science › Information Systems › Economic Growth and Development
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
Keywords
financial inclusion, economic growth, banks, long-run relationship, financial sector reform, cross-national comparison

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