The Role of Institutional Infrastructures in Financial Inclusion-Growth Relations: Evidence from SSA

Ajide, Kazeem and Raheem, Ibrahim and Alimi, Olorunfemi and Asongu, Simplice (2020): The Role of Institutional Infrastructures in Financial Inclusion-Growth Relations: Evidence from SSA. Forthcoming in: International Journal of Finance and Economics

Abstract

This paper investigates the role of institutional infrastructures in the financial inclusion-growth nexus for a panel of twenty countries in sub-Sahara Africa (SSA).Employing the System Generalized Method of Moments (GMM), the following insightful outcomes are established. First, while there is an unrestricted positive impact of physical access to ATMs and ICT measures of financial inclusion on SSA’s growth but only the former was found significant. Second, the four institutional components via economic, political, institutional and general governances were also found to be growth-spurring. Lastly, countries with low levels of real per capita income are matching up with other countries with high levels of real income per capita. The empirical evidence of some negative net effects and insignificant marginal impacts are indication that imperfections in the financial markets are sometimes employed to the disadvantage of the poor. On the whole, we established positive effects on growth for the most part. The positive effects are evident because the governance indicators compliment financial inclusion in reducing pecuniary constraints hindering credit access and allocation to the poor that deteriorate growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Financial Inclusion; Economic Growth; Governance; System Generalized Method of Moments (GMM)
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G20 - General; I - Health, Education, and Welfare > I1 - Health > I10 - General; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General; P - Economic Systems > P3 - Socialist Institutions and Their Transitions > P37 - Legal Institutions ; Illegal Behavior

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