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Policy coordination mechanism: Rural financial inclusion and public governance in developing countries

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  • Wu, Yiming
  • Li, Yuxuan
  • Xiong, Lichun

Abstract

Based on cross-country panel data from developing countries, this paper examines the impact of financial inclusion on rural public governance, introducing the level of fiscal policy implementation as a proxy variable for policy coordination to further explore its moderating effect. Additionally, the sample is divided according to per capita GDP to conduct heterogeneity analysis. The study finds: first, financial inclusion has a positive effect on public governance; second, the policy coordination mechanism significantly and positively moderates the relationship between financial inclusion and public governance; and third, in countries (or regions) with weaker socioeconomic foundations, the impact of financial inclusion on public governance is more pronounced, demonstrating significant structural heterogeneity. This research provides empirical evidence and policy references for promoting the integrated development of rural finance and public service systems.

Suggested Citation

  • Wu, Yiming & Li, Yuxuan & Xiong, Lichun, 2025. "Policy coordination mechanism: Rural financial inclusion and public governance in developing countries," Finance Research Letters, Elsevier, vol. 85(PB).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pb:s1544612325012292
    DOI: 10.1016/j.frl.2025.107971
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