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Financial inclusion and monetary policy targets: Evidence from the ECOWAS countries

Author

Listed:
  • Tuwe Soro Garbobiya

  • Olajide Oladipo

  • Paul Terhemba Iorember

Abstract

The study examines the impact of financial inclusion on monetary policy targets in the Economic Community of West African States for the period between 2004 and 2020. To capture how a shock to financial inclusion affects monetary policy targets in the ECOWAS sub-region, the study employs panel vector autoregression via the Generalized Method of Moments framework and uses the impulse response functions. The results show that in all ECOWAS countries, financial inclusion leads to an appreciation of the local currency, thereby improving the value of the exchange rate. However, it reduces the effectiveness of monetary policy. In particular, financial inclusion increases consumer prices and interest rates. Based on the findings, the study recommends, among others, the need for a single monetary policy in the ECOWAS sub-region to properly integrate its monetary policy framework in line with the economic and monetary integration policy of the West African Monetary Zone.

Suggested Citation

  • Tuwe Soro Garbobiya & Olajide Oladipo & Paul Terhemba Iorember, 2024. "Financial inclusion and monetary policy targets: Evidence from the ECOWAS countries," Modern Finance, Modern Finance Institute, vol. 2(1), pages 84-100.
    • Handle: RePEc:bdy:modfin:v:2:y:2024:i:1:p:84-100:id:107
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    References listed on IDEAS

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    5. Peterson K. Ozili & Adekemi Ademiju & Semia Rachid, 2022. "Impact of financial inclusion on economic growth: review of existing literature and directions for future research," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 50(8), pages 1105-1122, October.
    6. Peterson K. Ozili & Paul Terhemba Iorember, 2024. "Financial stability and sustainable development," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 2620-2646, July.
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    8. Mr. Kangni R Kpodar & Mihasonirina Andrianaivo, 2011. "ICT, Financial Inclusion, and Growth: Evidence from African Countries," IMF Working Papers 2011/073, International Monetary Fund.
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    Cited by:

    1. Simona Elena Ciobanu, 2024. "Financial Inclusion and Monetary Policy: A Review of Literature," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 3, pages 314-324.

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