Conference Paper
The Effects of Financial Inclusion on the Economic Development of MENA Countries
No.
ERF29AC_67
Publisher
ERF
Date
May, 2023
In the recent years, financial inclusion has taken a center stage in policy discussions regarding how to achieve higher growth rates and lower poverty levels. The existing literature analyzing the relation between financial inclusion and GDP mostly assumes a one way relation from financial inclusion to GDP, ignoring any possible reverse causality relationships. Furthermore, the literature adopts a financial inclusion index, or focuses on several indicators such as the number of bank branches, ATMs or the share of people having an account. Because financial inclusion is a broader concept having a multitude of dimensions, it is important to analyze the causal linkages between different financial inclusion indicators and GDP. In this paper, we analyze the nature and the direction of the causality between economic growth and a large number of financial inclusion indicators in MENA countries by adopting the recently developed nonlinear and nonparametric Kernel causality approach. Our analysis suggests that financial inclusion increases as the share of women having bank accounts, the share of adults with primary education having an account as well as the share of adults having a mobile account increases. We also identify the relation between main barriers to financial inclusion and GDP, and find that affordability and having insufficient funds are associated with GDP growth.
Research Fellows
Ayse Yasemin Yalta
Professor, Department of Economics, Hacettepe University, Turkey
Research Fellows
Abdullah Talha Yalta
Professor of Economics, TOBB University of Economics...