Open AccessFinancial Inclusion and Economic Growth: Empirical Evidence from Selected Developing Economies
Author(s) -
Noor Ul Ain,
Samina Sabir,
Nabila Asghar
Publication year - 2020
Publication title -
review of economics and development studies
Language(s) - English
Resource type - Journals
eISSN - 2519-9706
pISSN - 2519-9692
DOI - 10.47067/reads.v6i1.195
Subject(s) - financial inclusion , economics , language change , entrepreneurship , generalized method of moments , developing country , poverty , economic inequality , productivity , empirical evidence , control variable , government (linguistics) , panel data , inequality , finance , macroeconomics , financial services , economic growth , econometrics , art , mathematical analysis , philosophy , statistics , literature , mathematics , epistemology , linguistics
Financial inclusion is a tool used to enhance economic growth, alleviate poverty, create employment and reduce income inequality in developing countries through providing affordable financial goods and services to low income group through financial institutions. This study analyzes the relationship among financial inclusion, entrepreneurship, institutions and economic growth for 33 developing countries over time 2004-2016 using Generalized Method of Moments (GMM). The variables of financial inclusion, entrepreneurship and institutions are incorporated in Solow growth model through total factor productivity. Empirical results show that financial inclusion has positive effect on economic growth while entrepreneurship has negative but significant effect on economic growth. Whereas some institutional variables like rule of law and political stability have negative and other institutional variables like control of corruption and government effectiveness have positive effect on economic growth.