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Financial inclusion and banking stability: Does interest rate repression matter?

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  • Ghosh, Saibal

Abstract

The role of interest rate repression in affecting banks’ behavior has been well-studied in the literature. What has not been examined is how financial inclusion affects this relationship. Using cross-country data, we test the association between financial inclusion and banking stability in the presence of interest rate repression. Using bank-level data, we find that financial inclusion exerts a positive and statistically significant impact on banking stability, notwithstanding interest rate repression. The findings support the fact that financial inclusion is beneficial for banking stability, even after accounting for interest rate controls.

Suggested Citation

  • Ghosh, Saibal, 2022. "Financial inclusion and banking stability: Does interest rate repression matter?," Finance Research Letters, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:finlet:v:50:y:2022:i:c:s154461232200410x
    DOI: 10.1016/j.frl.2022.103205
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    More about this item

    Keywords

    Financial inclusion; Interest rate repression; Banking stability;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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