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The Effects of Economic and Financial Development on Financial Inclusion in Africa

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  • Evans, Olaniyi

Abstract

This study provides empirical evidence on the effects of economic and financial development on financial inclusion in Africa, using panel FMOLS for the 2005-2014 period. The study shows that economic growth has a significant positive impact on financial inclusion, meaning that African countries with higher economic growth have more inclusive financial systems. GDP per capita has a significant positive impact on financial inclusion. That is, income is an important factor in explaining the level of financial inclusion in Africa. It is, as well, established in this study, that although both economic and financial development promote financial inclusion, though the effects of economic development are much stronger. Also, inflation is negatively linked to financial inclusion, and as well insignificant across all specifications. Deposit interest rate is positively linked to financial inclusion, though insignificant. The low deposit interest rates in African countries do not encourage inclusive financial systems. Population, though positive, is insignificant. Internet has positive significant impact on financial inclusion, meaning that internet access is indispensable in a fast-moving and digital African economy. Literacy is also statistically significant, meaning that adult literacy is an important factor in explaining the level of financial inclusion in Africa. As well, Islamic banking presence and activity are associated with higher financial inclusion.

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  • Evans, Olaniyi, 2015. "The Effects of Economic and Financial Development on Financial Inclusion in Africa," MPRA Paper 81325, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:81325
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    Cited by:

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    2. Md. Qamruzzaman & Jianguo Wei, 2019. "Financial Innovation and Financial Inclusion Nexus in South Asian Countries: Evidence from Symmetric and Asymmetric Panel Investigation," IJFS, MDPI, vol. 7(4), pages 1-27, October.
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    4. Adegbola Olubukola Otekunrin & Tough Chinoda & Kudzanai Matowanyika, 2021. "The Nexus Between Economic Growth, Financial Development, Financial Inclusion and Financial Innovation in Africa," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(8), pages 672-681, August.
    5. Marc Audi & Chan Bibi & Khalil Ahmad, 2019. "Financial Inclusion, Economic Growth and Human Well-Being Nexus: Empirics from Pakistan, India, China, Sri-Lanka, Bangladesh and Malaysia," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 8(4), pages 177-190, December.
    6. Megha Jain & Aishwarya Nagpal & Abhay Jain, 2021. "Government Size and Economic Growth: An Empirical Examination of Selected Emerging Economies," South Asian Journal of Macroeconomics and Public Finance, , vol. 10(1), pages 7-39, June.
    7. Tough Chinoda & Joseph Olorunfemi Akande, 2019. "Financial Inclusion, Mobile Phone Diffusion, and Economic Growth; Evidence from Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 9(5), pages 104-110.
    8. Menyelim M. Chima & Abiola Ayopo Babajide & Alex Adegboye & Segun Kehinde & Oluwatobi Fasheyitan, 2021. "The Relevance of Financial Inclusion on Sustainable Economic Growth in Sub-Saharan African Nations," Sustainability, MDPI, vol. 13(10), pages 1-20, May.
    9. Aishwarya Nagpal & Megha Jain & Abhay Jain, 2020. "Determining the role of digital technology, governance and institutions in advancing financial inclusion in BRICS nations using probit regression analysis," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 22(2), pages 443-459, December.

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    More about this item

    Keywords

    Financial inclusion; financial development; economic development; panel FMOLS;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • G2 - Financial Economics - - Financial Institutions and Services
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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