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The Sustainable Development of Financial Inclusion: How Can Monetary Policy and Economic Fundamental Interact with It Effectively?

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  • Xuluo Yin

    (College of Finance and Statistics, Hunan University, Changsha 410006, China)

  • Xuan Xu

    (College of Finance and Statistics, Hunan University, Changsha 410006, China)

  • Qi Chen

    (College of Finance and Statistics, Hunan University, Changsha 410006, China)

  • Jiangang Peng

    (College of Finance and Statistics, Hunan University, Changsha 410006, China)

Abstract

It is necessary to analyze the relationship between financial inclusion and circumstances-monetary policy and economic fundamentals, which has a practical reference value for policy makers. This paper studies the impact of the circumstances on financial inclusion factors by using a vector autoregressive method. Empirical results show that monetary policy has a short-term positive impact on financial inclusion factors, while the economic fundamental has the opposite, which means that the positive monetary policy promote the development of financial inclusion in the short term and the sudden change of the economic situation will make it harder. Based on the data of the World Bank and the situation of China, we make an analysis and comparison of the empirical results, and draw two implications: first, the sustainable development of financial inclusion needs a suitable circumstance; second, the appropriate coordination and mutual facilitation of economic fundamentals and finance is conducive to the sustainable development of financial inclusion.

Suggested Citation

  • Xuluo Yin & Xuan Xu & Qi Chen & Jiangang Peng, 2019. "The Sustainable Development of Financial Inclusion: How Can Monetary Policy and Economic Fundamental Interact with It Effectively?," Sustainability, MDPI, vol. 11(9), pages 1-14, May.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:9:p:2524-:d:227485
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