Economic and social inclusion has become a key guide for economic policy in recent years. Role of financial inclusion for economic growth in ethiopia. Financial inclusion, poverty, and income inequality in. The relationship between financial inclusion and gdp growth. Financial inclusion is one of the channels through which ict affects economic growth thus it will also contribute to growth of countries. Pdf international journal of economics and financial issues. S8 2 the paper investigates the effect of financial inclusion on economic growth and development in nigeria over the. Further, it explores what financial inclusion really means from. As a principal research economist, he also supported private sector operations as a.
Nexus between financial inclusion and economic growth. This study is to empirically investigate the role of financial inclusion in poverty reduction and economic growth in a developing economy using panel data. Universally, all inclusive financial system indeed promotes economic growth. Pdf purpose the purpose of this paper is to assess the dynamic impact of financial inclusion on economic growth for a large number of. The global pursuit of financial inclusion as a vehicle for economic development had a positive effect in nigeria as the exclusion rate reduced from 53. Clarity on how financial inclusion is linked to economic growth and income distribution is important not only in making the case that financial inclusion is desirable, but also more critically for formulating effective. Financial inclusion, poverty, and income inequality in developing asia the authors present a broadbased financial inclusion indicator to assess various macroeconomic and countryspecific factors affecting the degree of financial inclusion for 37 selected developing asian economies. The purpose of this paper is to shed light on the role ict development, especially mobile phone penetration, can play in promoting financial inclusion and economic growth. Pdf on jun 1, 2018, yilmaz bayar and others published financial inclusion and economic growth. In doing so, this publication provides a comprehensive definition of financial inclusion and discusses issues related to measurement. With this backdrop, this research study is an attempt to find out the present scenario of financial inclusion in india and assessing the role of financial inclusion in economic growth of the country. Promoting inclusive growth in the economy, including financial inclusion, is critical to sustainable development as it includes the majority of the population such as the poor and the disadvantage.
Financial inclusion covers sustainable, relevant, cost. Issues and challenges abstract financial inclusion is a state where financial services are delivered by a range of providers, mostly the private sector, to reach everyone who could use them. Access to and use of financial services is one of the major drivers of economic growth. Gdp per capita has a significant positive impact on financial inclusion. The concept of inclusive growth is multifaceted and has financial inclusion as one of its main. Pdf financial inclusion and economic growth linkage. Economic growth has a strong positive relationship with branch networks and a weak positive relationship with the number of mobile money usersaccounts. There is now a wealth of evidence from worldwide research that suggests financial inclusion plays a critically important role in poverty reduction, reducing income disparities and increasing economic growth. Financial inclusion was one of the channels through which the development of mobile telephony improved the economic growth. It is in this context that i thought it would be appropriate to place the strategy of financial inclusion in the wider context of economic growth and financial deepening. The study examined the effects of financial inclusion on economic growth in nigeria from 2000 to 2018. Indias most recent development plan has two main objectives. Financial inclusion may both increase as well as decrease the efficiency of usage the different tools and channels of central banks monetary policy in achieving the most important purposesfinancial stability and economic growth. Commercial banks, financial inclusion and economic growth in.
Financial development is not simply a result of economic growth. Financial inclusion and economic growth in oic countries. Financial inclusion in africa african development bank. Since the need of financial products varies from individual to individual and country to country kempson and whyley, 1999. This study concludes that economic growth in kenya has a strong positive relationship with financial inclusion in kenya. Globally, financial inclusion fi and digital financial services dfs have become a lifeblood and key driver of socioeconomic growth and development on the backdrop that economies are dependent on financial services to attain advancement.
The g20 made the topic one of its pillars at the 2009 pittsburgh summit g20 2009. Access to a transaction account is a first step toward broader financial inclusion. But, majority of researchers and thinkers opine that financial inclusion is the easy availability of all banking. Pdf financial inclusion in the digital age, its role and. On the other hand economic growth has a weak negative relationship. This study is to empirically investigate the role of financial inclusion in poverty reduction and economic growth in a developing economy using panel data analysis ranges from 2006 to 2015 within. While in some of policy especially for financial liberalization shows failure to improve finance on growth output.
Financial inclusion in india an assessment1 overcoming poverty is not a gesture of charity. Specifically, we analyze the impact of mobile phone penetration on economic growth rates in africa. They have shown that mobile penetration had a positive impact on the economic growth by facilitating financial inclusion, but it has also consolidated the impact of financial inclusion on the economic growth. Fostering economic growth and accelerating poverty.
A model application to colombia prepared by izabela karpowicz authorized for distribution by valerie cerra september 2014 abstract financial inclusion has been one of the key pillars of colombias development strategy for a number of years. The traditional idea of financial inclusion is the provision of access to and usage of diverse, convenient, affordable financial services. The present research study focuses on evaluating the impact of financial inclusion on economic development among beneficiaries of five banks namely, jkb, jkgb, sbi. Therefore, financial inclusion has emerged as an important global agenda for sustainable longterm economic development. A few studies have been analyzed the impact of financial inclusion on indian economic growth and found mixed results. May 15, 2015 but how financial inclusion could impact on macroeconomic growth and inequality often remains ambiguous and even confusing. Adbs longterm strategic framework, strategy 2020, emphasizes financial inclusion as an essential part of financial sector development. Commercial banks, financial inclusion and economic growth. Financial inclusion and inclusive growth world bank documents. Regulatory impact on mobile money and financial inclusion.
A theoretical and quantitative analysis of financial. Commercial banks, financial inclusion and economic growth in india. By fall 20, more than 50 nationallevel policymaking and regulatory bodies had publicly committed to financial inclusion strategies for their countries world bank 20a, afi 20. The role of financial inclusion on economic growth hilaris. Accelerating financial inclusion in southeast asia with. This paper examines the effects of financial inclusion on the economic growth of nigeria 19822012. To help narrow the gap between aspiration and action, the world economic forum system initiative on shaping the future of economic progress last year introduced a new economic policy framework and performance metric in its inclusive growth and development report 2017. It is on the basis of this motivation that the study is primarily design to investigate the influence of financial inclusion on the growth of african economy, using nigeria as a case study.
A model application to colombia prepared by izabela karpowicz authorized for distribution by valerie cerra september 2014 abstract financial inclusion has been one of the key pillars of colombias. Financial inclusion fi, a feature of fi nancial development, is a process that marks improvement in quantity, quality, and effi ciency of fi nancial intermediary services. Financial inclusion, poverty reduction and economic growth. The sustainable development of financial inclusion mdpi. National strategy for financial inclusion fostering economic growth and accelerating poverty reduction to achieve a financial system that is accessible by all layers of the community and to promote economic growth, poverty reduction and income equality national strategy for financial inclusion working group juni 2012 sekretariat wakil. Role of banks in financial inclusion in india sciencedirect. Asian countries are increasingly tackling this agenda of inclusive growth. On the basis of findings of the study, it is suggested that the policy makers around the globe should strive to surge the level of financial inclusion for an optimal, sustainable, inclusive economic growth and development of the economies by focusing on removing the regional imbalances. Financial inclusion and economic growth in waemu munich.
Specifically, it means a financial system that serves as many people as possible in a country. Banks financial inclusion growth opportunities will be the greatest in markets that embrace technologyled innovation, and which have a clear and supportive policy framework for financial stability. Recently, cgap has developed a theory of change to guide the financial inclusion community toward an updated narrative that shows the many ways financial services can impact the lives of poor people. Proxy measures for financial inclusion and economic growth. The dependent variable of financial inclusion proxied by contribution of financial institutions to gross domestic product gdp was regressed on the explanatory variable of. Pdf international journal of economics and financial. However, at scale 2 48 years, we found a bidirectional causality between economic growth and financial inclusion. Data for the study are collected mainly from secondary sources such as statistical bulletins of the central bank of nigeria c. It generates local savings, which increase productive investments in local businesses. Research has empirically linked measures of financial depth with greater economic growth and lower income inequality king and levine 1993. Relationships between financial inclusion and financial. It is the protection of a fundamental human right, the right to dignity and a decent life. That is, income is an important factor in explaining the level of.
Kabita kumari sahu lecturer in economics, north orissa university baripada, odisha, india abstract. The objectives of the paper are to understand the present status of indias financial inclusion, to. There is growing evidence that appropriate financial services have substantial benefits for consumers, especially women and poor adults. Archival data sourced from central bank of nigeria statistical bulletin was used for the estimation of the variables. Pdf effects of financial inclusion on economic growth in. Role of financial inclusion for economic growth in. The relationship between financial inclusion and gdp. Financial system introduction theoretical literature of financial inclusion on economic growth financial inclusion becomes a major phenomenon for policy maker across the world for planning a strong policy in achieving the sustainable growth. Fostering economic growth and accelerating poverty reduction. Imfmit study shows how financial inclusion drives economic. Financial inclusion fi, a feature of fi nancial development, is a process that marks.
Financial inclusion and economic growth in india for the first time, global corporates realized the importance of indian it because of the y2k phenomenon. The inclusive development index 2018 summary and data. Abstract the heterogeneity in view about the financial inclusion prevails across the globe. The global development community has debated the question of how financial services impact the lives of poor people for decades. The purpose of this study is to assess the nexus between the vast dimensions of financial inclusion and economic development of the emerging indian economy. Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs transactions, payments, savings, credit and insurance delivered in a responsible and sustainable way.
Financial inclusion also enhances growth by increasing savings and diversifying a pool of resources which is channeled efficiently among. As the concept of financial inclusion means how many individuals and firms use financial services, the key factors to measure financial inclusion are financial service usage statistics such as accounts penetration, savings, credit, insurance, etc. S8 2 the paper investigates the effect of financial inclusion on economic growth and development in nigeria over the period 19862015 using the ordinary least squares. My ideas on this topic are organised along the following lines. The heterogeneity in view about the financial inclusion prevails across the globe.
This means that many activities carried out to increase the level of financial inclusion may turn out to be risky. Today india is the second fastest growing economy in the world. Extrapolated time series financial inclusion data from nigeria, covering the period of 1981 to 20 were used in the analysis. Pdf a theoretical and quantitative analysis of financial.
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