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Financial Inclusion and Economic GROWTH: An International Evidence

Author

Listed:
  • Loan Thi-Hong Van
  • Anh The Vo
  • Nhan Thien Nguyen
  • Duc Hong Vo

Abstract

Policies on financial inclusion have attracted great attention from scholars, policymakers, and regulators, as financial inclusion has theoretically been acknowledged to have positive effect on economic growth. However, empirical evidence appears limited, especially for emerging markets. This article is conducted to provide a comprehensive insight between financial inclusion and economic growth in emerging markets. First, a multidimensional index is constructed so that a level of financial inclusion can be measured at the international level. Second, based on this newly developed index, the panel econometric technique is utilized to estimate the impact of financial inclusion on economic growth. Our finding supports a positive relationship between financial inclusion and economic growth. A stronger relationship is found for countries with low income and a lower degree of financial inclusion. Policy implications have been emerged that financial inclusion should be implemented for promoting economic growth and development in the emerging markets such as Vietnam.

Suggested Citation

  • Loan Thi-Hong Van & Anh The Vo & Nhan Thien Nguyen & Duc Hong Vo, 2021. "Financial Inclusion and Economic GROWTH: An International Evidence," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(1), pages 239-263, January.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:1:p:239-263
    DOI: 10.1080/1540496X.2019.1697672
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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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