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Quantitative insights into the impact of financial inclusion on economic growth: an econometric evaluation of Arab countries (2011-2022)

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  • Abdelghani KAHELA

    (Yahia Fares University of Medea, Algeria)

  • Ouissam HOCINI

    (Yahia Fares University of Medea, Algeria)

  • Mohamed BOULESNAM

    (Yahia Fares University of Medea, Algeria)

  • Kamel BASSOUR

    (Yahia Fares University of Medea, Algeria)

Abstract

This study aims to analyze the influence of financial inclusion on economic growth in Arab countries between 2011 and 2022, focusing on key indicators such as bank account ownership, access to financial services, and borrowing trends. The study highlights the main role of financial inclusion in promoting economic stability and supporting underserved communities across the region. Using Feasible Generalized Least Squares (FGLS) within a fixed effects framework, the research addresses econometric challenges, including heteroskedasticity and autocorrelation, to accurately capture relationships within the data. Cluster analysis further categorizes countries based on financial inclusion performance, identifying leaders like the UAE, Bahrain, and Saudi Arabia, with Iraq ranking lower. Findings reveal a statistically significant positive impact of access to bank accounts on economic growth, affirming the role of financial inclusion in driving economic stability. While access to financial services strongly correlates with growth, other indicators, such as borrowing levels, show weaker or insignificant effects, suggesting that broader financial access alone may not fully drive economic growth without supportive policies.

Suggested Citation

  • Abdelghani KAHELA & Ouissam HOCINI & Mohamed BOULESNAM & Kamel BASSOUR, 2025. "Quantitative insights into the impact of financial inclusion on economic growth: an econometric evaluation of Arab countries (2011-2022)," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(642), S), pages 103-124, Spring.
    • Handle: RePEc:agr:journl:v:xxxii:y:2025:i:1(642):p:103-124
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    References listed on IDEAS

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    1. Siddiki, Jalal & Bala-Keffi, Ladi R., 2024. "Revisiting the relation between financial inclusion and economic growth: a global analysis using panel threshold regression," Economic Modelling, Elsevier, vol. 135(C).
    2. Asli Demirguc-Kunt & Leora Klapper, 2013. "Measuring Financial Inclusion: Explaining Variation in Use of Financial Services across and within Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(1 (Spring), pages 279-340.
    3. Asli Demirguc-Kunt & Leora Klapper, 2013. "Measuring Financial Inclusion: Explaining Variation in Use of Financial Services across and within Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 44(1 (Spring), pages 279-340.
    4. Hu, Yue & Liu, Chang & Peng, Jiangang, 2021. "Financial inclusion and agricultural total factor productivity growth in China," Economic Modelling, Elsevier, vol. 96(C), pages 68-82.
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