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Do financial stability and institutional quality have impact on financial inclusion in developing economies? A new evidence from Nigeria

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  • Onyinye I. Anthony-Orji
  • Anthony Orji
  • Jonathan E. Ogbuabor
  • Emmanuel O. Nwosu

Abstract

This paper investigates the empirical linkages among financial stability, institutional quality and financial inclusion in Nigeria using quarterly data from 1986-2013. For empirical analysis, the study applies the autoregressive distributed lag model based on unrestricted error correction model (ARDL-UECM). First, the results show evidence that financial stability has significant impact on financial inclusion in the long run period but not in the short run. Second, the study reveals that institutional quality has significant impact on financial inclusion in the long run period and in the short run. Having found that financial stability and institutional quality are positively related to financial inclusion in the long run, the study therefore recommends that the government and policymakers pursuing the agenda of financial inclusion should pay attention not only to the financial and economic indicators but also to institutional factors existing in the country since they interact in creating a harmonised and sustainable developmental trajectory. In a country where the economic, legal, judicial and political institutions are very weak, many households (savers) and firms (borrowers/investors) may not be protected when there are issues of financial contract enforcements or breaches within the economy.

Suggested Citation

  • Onyinye I. Anthony-Orji & Anthony Orji & Jonathan E. Ogbuabor & Emmanuel O. Nwosu, 2019. "Do financial stability and institutional quality have impact on financial inclusion in developing economies? A new evidence from Nigeria," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 11(1), pages 18-40.
    • Handle: RePEc:ids:ijsuse:v:11:y:2019:i:1:p:18-40
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    Citations

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    Cited by:

    1. Khan, Muhammad Atif & Gu, Lulu & Khan, Muhammad Asif & Bhatti, Muhammad Ishaq, 2022. "Institutional perspective of financial sector development: A multidimensional assessment," Economic Systems, Elsevier, vol. 46(4).
    2. Ekene ThankGod Emeka & Simplice A. Asongu & Yolande E. Ngoungou, 2024. "Gender economic inclusion, governance institutions and economic complexity in Africa," Working Papers of the African Governance and Development Institute. 24/012, African Governance and Development Institute..
    3. Damane, Moeti & Ho, Sin-Yu, 2024. "The impact of financial inclusion on financial stability: review of theories and international evidence," MPRA Paper 120369, University Library of Munich, Germany.
    4. Isaac Ofoeda & John Kwaku Mensah Mawutor & Dilys Nana Fosu-Hemaa Ohenebeng, 2024. "Financial inclusion, institutional quality and bank stability: evidence from sub-Saharan Africa," International Economics and Economic Policy, Springer, vol. 21(1), pages 27-64, February.
    5. Simplice A. Asongu & Jean R. F. K. Bouanza & Armand F. Akpa, 2024. "Governance and Structural Transformation in Africa: Thresholds of Lifelong Gender Inclusive Education," Working Papers of the African Governance and Development Institute. 24/037, African Governance and Development Institute..
    6. Samson Adewumi, 2024. "Level of Financial Literacy Skills and Managerial Decision Implication among University Managers," International Review of Management and Marketing, Econjournals, vol. 14(4), pages 1-11, July.
    7. Jonathan E. Ogbuabor & Anthony Orji & Charles O. Manasseh & Onyinye I. Anthony-Orji, 2020. "Institutional Quality and Growth in West Africa: What Happened after the Great Recession?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 26(4), pages 343-361, November.
    8. Jean Michel Roy Oualy, 2021. "Income Inequality and Socio-Political Instability in Sub-Saharan Africa," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 19(1 (Spring), pages 49-72.
    9. Armand F. Akpa & Simplice A. Asongu, 2023. "The role of governance in the effect of the internet on financial inclusion in sub-Saharan Africa," Working Papers of the African Governance and Development Institute. 23/004, African Governance and Development Institute..
    10. Muhammad Hussain & Farzan Yahya & Muhammad Waqas, 2021. "Does strong governance stimulate the effect of economic freedom and financial literacy on financial inclusion? a cross-country evidence," Future Business Journal, Springer, vol. 7(1), pages 1-10, December.
    11. Rexford Abaidoo & Elvis Kwame Agyapong, 2025. "Macroeconomic shocks, regulatory uncertainty, and the drive towards financial inclusiveness in emerging economies," International Economics and Economic Policy, Springer, vol. 22(1), pages 1-22, February.
    12. Ongo Nkoa, Bruno Emmanuel & Song, Jacques Simon, 2020. "Does institutional quality affect financial inclusion in Africa? A panel data analysis," Economic Systems, Elsevier, vol. 44(4).
    13. Charles S. Saba & Simplice A. Asongu & Nicholas Ngepah & Yolande E. Ngoungou, 2023. "Governance in the exploration of global and regional determinants of ICT development," Working Papers of the African Governance and Development Institute. 23/040, African Governance and Development Institute..
    14. Anthony Orji & Jonathan E. Gbuabor & Christian E. Ugwu & Onyinye I. Anthony-Orji, 2019. "Cash Reserve Requirement and Credit to SMEs in Nigeria: An ARDL Bounds Test Aproach," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 9(1), pages 10-28, June.
    15. Murshed, Muntasir & Ahmed, Rizwan & Al-Tal, Raad Mahmoud & Kumpamool, Chamaiporn & Vetchagool, Witchulada & Avarado, Rafael, 2023. "Determinants of financial inclusion in South Asia: The moderating and mediating roles of internal conflict settlement," Research in International Business and Finance, Elsevier, vol. 64(C).
    16. Ozili, Peterson K, 2023. "Institutional theory of financial inclusion," MPRA Paper 115770, University Library of Munich, Germany.
    17. Shubham Chavriya & Gagan Deep Sharma & Mandeep Mahendru, 2024. "Financial inclusion as a tool for sustainable macroeconomic growth: An integrative analysis," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 95(2), pages 527-551, June.
    18. Damane, Moeti & Ho, Sin-Yu, 2024. "Effects of financial inclusion on financial stability: evidence from ssa countries," MPRA Paper 120238, University Library of Munich, Germany.
    19. Jonathan E. Ogbuabor & Onyinye I. Anthony-Orji & Oliver E. Ogbonna & Anthony Orji, 2019. "Regional integration and growth: New empirical evidence from WAEMU," Progress in Development Studies, , vol. 19(2), pages 123-143, April.

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