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Reaching out to the unbanked: The role of political ideology in financial inclusion

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  • de Jong, Abe
  • Shahriar, Abu Zafar
  • Shazia, Farhan

Abstract

This paper studies the effect of political ideology on household financial inclusion. Financial inclusion is the access to formal financial services and provides an entry key for people to participate in the economy. Using granular data of 65 countries, we find that financial inclusion is higher under right-wing regimes than under left-wing governments. We use regression discontinuity design and propensity-score matching to address endogeneity issues. We investigate multiple channels for the effect and conclude that right-wing market-oriented policies are more successful in enhancing financial inclusion than left-wing societal policies.

Suggested Citation

  • de Jong, Abe & Shahriar, Abu Zafar & Shazia, Farhan, 2022. "Reaching out to the unbanked: The role of political ideology in financial inclusion," Journal of International Money and Finance, Elsevier, vol. 126(C).
    • Handle: RePEc:eee:jimfin:v:126:y:2022:i:c:s026156062200081x
    DOI: 10.1016/j.jimonfin.2022.102678
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    More about this item

    Keywords

    Financial inclusion; Government ideology; Political ideology; Mobile banking;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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