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Economic Uncertainty in Developing Countries: Does Financial Inclusion Matter?

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  • Oueghlissi Rim

    (University of Jendouba (FSJEG, Economics Department) and ECSTRA (IHEC, University of Carthage), Tunisia)

Abstract

The global expansion of financial inclusion is a critical issue for policymakers around the world. However, its impact on economic uncertainty remains poorly understood. This paper addresses this gap by carefully considering self-selection bias and endogeneity in the relationship between financial inclusion and economic uncertainty. Using matching techniques, we examine whether the level of financial inclusion (i.e., the treatment) has a significant impact on economic uncertainty (i.e., the outcome). Analyzing a sample of 99 developing countries over the period 2004-2018 and employing two matching techniques, we find that the average treatment effect of financial inclusion on economic uncertainty is negative and statistically significant, suggesting that countries with higher financial inclusion experience lower economic uncertainty. These robust results, across various empirical specifications, highlight the important role of inclusive financial systems in mitigating economic uncertainty in developing countries.

Suggested Citation

  • Oueghlissi Rim, 2025. "Economic Uncertainty in Developing Countries: Does Financial Inclusion Matter?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 40(4), pages 655-676, December.
    • Handle: RePEc:ris:integr:021799
    DOI: 10.11130/jei.2025014
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    Keywords

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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