Examining the Nexus of Financial Inclusion, Household Consumption, and Economic Growth: A 3SLS Approach

The relationship between finance and economy is a long-standing debate in the development literature. While some researchers argue that finance simply follows economic development, others argue that finance is a critical determinant of economic growth. Research findings on this issue vary across countries, periods, data sets, and research methodologies. On the other hand, the relationship between economic growth and financial inclusion is a relatively new area of study in the academic literature. The primary goal of financial inclusion is to ensure that everyone can access and use financial products at an affordable cost. In this context, access to and use of financial products is seen in the context of financial citizenship. This paper examines the impact of digital banking and financial inclusion on economic growth and household consumption in Turkey. For this purpose, financial inclusion and digital banking indices have been constructed. Furthermore, the relationship of these indices with the GDP index and household consumption index is examined using the three-stage least square (3SLS) method with two separate equations. The results show that digital banking and financial inclusion have a positive impact on economic growth and household consumption in Turkey.