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Does institutional quality matter for financial inclusion? International evidence

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  • Duc Hong Vo

Abstract

Financial inclusion is pivotal in supporting sustainable economic growth and social transformation. It is a key enabler for reducing poverty and uplifting prosperity. Improving financial inclusion has attracted significant attention from practitioners, academics, and governments. However, the asymmetric effect of institutional quality on financial inclusion contingent upon the income level has largely been neglected in the existing literature. As such, this study examines this asymmetric effect using the panel smooth transition regression for a sample of 110 countries globally from 2004 to 2020. Our empirical findings confirm the asymmetric effect of institutional quality on financial inclusion depending on the income level. Improved institutional quality is associated with extended financial inclusion in high-income and middle-income countries. However, low-income countries may not benefit from their institutional reform. Policy implications have emerged based on these empirical findings.

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  • Duc Hong Vo, 2024. "Does institutional quality matter for financial inclusion? International evidence," PLOS ONE, Public Library of Science, vol. 19(2), pages 1-15, February.
    • Handle: RePEc:plo:pone00:0297431
    DOI: 10.1371/journal.pone.0297431
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    References listed on IDEAS

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    3. Ahamed, M. Mostak & Mallick, Sushanta K., 2019. "Is financial inclusion good for bank stability? International evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 403-427.
    4. Noelia Cámara & David Tuesta, 2018. "Measuring financial inclusion: a multidimensional index," IFC Bulletins chapters, in: Bank for International Settlements (ed.), The role of data in supporting financial inclusion policy, volume 47, Bank for International Settlements.
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    6. Ghosh, Saibal & Vinod, D., 2017. "What Constrains Financial Inclusion for Women? Evidence from Indian Micro data," World Development, Elsevier, vol. 92(C), pages 60-81.
    7. Muriu, Peter W., 2020. "Role of Institutional Quality in Promoting Financial Inclusion," Working Papers eeaa4530-b032-4838-968b-d, African Economic Research Consortium.
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    Cited by:

    1. Eunjung Park & Sangyoon Yi, 2025. "Compulsory education enhances financial inclusion across socioeconomic groups: a global analysis," Palgrave Communications, Palgrave Macmillan, vol. 12(1), pages 1-14, December.

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