Corporate governance and financial inclusion

Purpose - This paper examines the association between corporate governance and financial inclusion in terms of correlation. This paper examines whether countries that have a strong corporate governance environment also experience better financial inclusion outcomes. Design/methodology/approach - The indicators of financial inclusion are automated teller machines (ATMs) per 100,000 adults, bank accounts per 1,000 adults and bank branches per 100,000 adults, while the indicators of corporate governance are extent of corporate transparency index, the extent of director liability index, the extent of disclosure index, the extent of ownership and control index, the extent of shareholder rights index, minority investors protection index and ease of shareholder suits index. The association was analyzed using Pearson correlation analysis and granger causality test. Findings - Strong corporate governance is significantly associated or correlated with better financial inclusion outcomes. The regional analyses show that corporate governance has a significant positive association with financial inclusion in Asian countries and in Middle East countries. However, a positive and negative association was observed between some indicators of corporate governance and financial inclusion in European countries, North American countries, South American countries, African countries and in Middle East and North Africa (MENA) countries, implying that strong corporate governance has a positive and negative association with financial inclusion depending on the indicators of corporate governance and financial inclusion used. There is also evidence of uni-directional granger causality between corporate governance and financial inclusion. Originality/value - Little is known about the association between corporate governance and financial inclusion. This paper is the first to examine this association.