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Are Social Capital and Financial Inclusion Complements or Substitutes? Empirical Evidence from Sudan

Author

Listed:
  • Kamal Kasmaoui
  • Farid Makhlouf

    (éklore-ed School of Management, France)

Abstract

Financial inclusion is central to economic development, yet its interaction with social capital remains underexplored in developing economies. Using micro-level data from the Arab Barometer survey for Sudan, this study examines whether social capital complements or substitutes formal financial inclusion. The results indicate a substitution effect: generalized trust reduces reliance on formal financial services. In contexts of weak institutions and widespread informality, trust-based social networks facilitate financial transactions outside the banking system. These findings highlight the institutional foundations of financial behavior and offer policy-relevant insights for designing inclusive financial systems in fragile economies.

Suggested Citation

  • Kamal Kasmaoui & Farid Makhlouf, 2026. "Are Social Capital and Financial Inclusion Complements or Substitutes? Empirical Evidence from Sudan," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 16(1), pages 55-59.
    • Handle: RePEc:afj:journ3:v:16:y:2026:i:1:p:55-59
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-rdfin_v16_n1_a4
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    Keywords

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    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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