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Dynamics between Bank-led Financial Inclusion and Economic Growth in Emerging Economies: The Case of India

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  • Nanda, Kajole

Abstract

The purpose of this article is to examine the nexus between financial inclusion and economic growth in the emerging Indian economy, both, theoretically and empirically using and ARDL methodological approach. The theses of the paper state that financial inclusion strives to include the previously excluded in the ambit of formal financial services and the economic system. This, in turn promotes capability enhancement, human development, economic productivity and thus, inclusive growth. The empirical results point out that in the context of India, there is a bi-directional and positive relationship between financial inclusion and economic growth, in the long as well as short run. Economic growth helps to foster financial inclusion by overcoming the demand and supply bottlenecks of the formal financial system. On the other side, financial inclusion aids to actualize the objective of inclusive economic growth; which helps in the reduction of the deep-rooted problems of income inequality and poverty.

Suggested Citation

  • Nanda, Kajole, 2019. "Dynamics between Bank-led Financial Inclusion and Economic Growth in Emerging Economies: The Case of India," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 9(1), pages 95-121.
  • Handle: RePEc:gok:ijdcv1:v:8:y:2019:i:1:p:95-121
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    Keywords

    Financial development; financial inclusion; economic growth; social inclusion.;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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