Narrow Results

This study examines the effect of board gender diversity within Microfinance Institutions (MFIs) on their ability to acquire new borrowers, a key indicator of progress toward achieving the financial inclusion agenda of the Sustainable Development Goals (SDGs). Utilizing an unbalanced panel dataset consisting of 1,450 unique MFIs operating in 106 countries over the period of 2010–2018, this study deployed various econometric models, including the Pooled Ordinary Least Squares (POLS), Random Effects Model (REM), and Fixed Effects Model (FEM). Rigorous measures, including endogeneity-corrected techniques, alternative proxies for board gender diversity such as the BLAU index and sub-sample analyses were applied to ensure the reliability and robustness of our results. The study’s findings indicated a positive association between board gender diversity and financial inclusion within MFIs. However, the statistical significance of these outcomes varied depending on the specific analytical techniques, sub-samples, and alternative proxies used during the research. Overall, this study offers implications for practitioners and policymakers, encouraging women’s participation in the boardrooms of MFIs to advance the financial inclusion agenda of the SDGs.

We estimated the effect of the share of mortgage lending by individual banks (together with some control variables) on two measures of financial stability — the bank Z-score and the non-performing loan ratio — for a sample of 397 banks in 19 emerging Asian economies for the period 2003–2014 from the Bankscope database. We find evidence that an increased share of mortgage lending is positive for financial stability, specifically by lowering the probability of default by financial institutions and reducing the non-performing loan ratio, at least in non-crisis periods, for levels of mortgage shares up to 23–65%. For higher levels of mortgage lending shares, there is some evidence that the impact on financial stability turns negative. We also find that the share of mortgage lending can be a useful measure of both financial development and financial inclusion.

This finding most likely reflects the effect of a higher share of mortgage lending in diversifying the mix of banks’ assets and thereby reducing overall risk. However, if the share of mortgage lending is too high, then the diversification effect diminishes. Therefore, the challenge is to balance the expected improvement in financial stability due to asset diversification against negative impacts that might result from easier lending standards or too rapid increases in mortgage lending that could trigger a bubble in the housing market. This highlights the need for prudent monetary policy and macroprudential policy measures to forestall the development of such bubbles.

This paper examines two aspects of financial inclusion in the context of Myanmar. First, it examines the factors that determine access to formal savings products. Second, it looks at what the barriers to saving are. Using data from a nationally representative survey of 5100 individuals, the paper applies econometric estimation and qualitative data analysis methods to provide answers to these questions. Findings show a low level of saving in Myanmar, and that formal savings increase with income, education, and keeping a budget, among other factors. Policy recommendations include the design of financial literacy programs that are suitable to the Myanmar context, and providing access to financial services.

Developing economies are seeking to promote financial inclusion, i.e., greater access to financial services for low-income households and firms. This raises the question of whether greater financial inclusion tends to increase or decrease financial stability. A number of studies have suggested both positive and negative impacts on financial stability, but very few empirical studies have been made. This study focuses on the implications of greater financial inclusion for small and medium-sized enterprises (SMEs) for financial stability. It estimates the effects of measures of the share of bank lending to SMEs on two measures of financial stability — bank nonperforming loans and bank Z scores. We find some evidence that an increased share of lending to SMEs aids financial stability by reducing non-performing loans (NPLs) and the probability of default by financial institutions.

In this paper, we assess empirically whether financial inclusion contributes to reducing income inequality when controlling for other key factors, such as economic development and fiscal policy. We conclude that financial inclusion contributes to reducing income inequality to a significant degree, while the size of the financial sector does not. Although our results are still preliminary and constrained by data limitations, they still bear significant policy implications. More specifically, fostering financial inclusion has one more important by-product, which had hardly been analyzed yet, namely reducing income inequality. More specifically, given the broad definition of financial inclusion used in our analysis, promoting financial inclusion implies facilitating the use of credit to low-income households, as well as granting credit to small and medium-sized enterprises.

This paper extends the existing literature on financial inclusion by analyzing the factors affecting financial inclusion and assessing the impact of financial inclusion on poverty and income inequality in the world and Asia. We construct a new financial inclusion indicators to assess various macroeconomic and country-specific factors affecting the degree of financial inclusion for 176 economies, including 37 of which from developing Asia. We test the impact of financial inclusion, along with other control variables, on poverty and income inequality. We do so for full sample of countries and then for developing Asia sample to access which factors are relevant for full sample and for developing Asia specifically. The estimation results show that per capita income, rule of law, and demographic characteristics significantly affect financial inclusion for both world and Asia samples. However, primary education completion and literacy significantly increases financial inclusion only in the full sample, not for the Asian sample. The findings also indicate that financial inclusion is significantly correlated with lower poverty and income inequality levels for the full sample. For developing Asia, however, there appears to be no link between financial inclusion and income inequality.

Governments and global institutions are working to enhance economic development as a key for sustainability by including disadvantaged people (including the poor, women, youth, and illiterate) in the financial system. This paper uses the World Bank Global Findex Database (2014) for 1000 Palestinians to examine the influence of individual behavior on financial inclusion in Palestine. This study used empirical methods to determine whether individual socioeconomic characteristics influence financial inclusion in Palestine. The results indicated that females were less likely to be included in financial transactions, especially transactions involving borrowing and formal accounts. Further, we learned that borrowing behavior in Palestine leans toward informal sources. Formal institutions have made remarkable efforts to develop an inclusive financial infrastructure in Palestine. However, the country’s unstable political climate continues to impede economic stability and individuals’ motivation to use formal financial resources such as credit. More efforts to specifically encourage youth, the poor, and women to use formal banking could enhance their access to financial services. Adopting Islamic financial services, and online banking would also improve financial inclusion for all of Palestine’s citizens and drive sustainable development. Further, theoretical and empirical studies of Palestine’s economic development are recommended.

Considering the reverberations of financial crisis of 2007–09 that the banking industry terribly witnessed, this paper aims to estimate both the non-bias-corrected and bias-corrected efficiency by employing the data envelopment analysis and Simar–Wilson double bootstrapping regression techniques over the period of 2011–2017 and see how the financial inclusion impacts on Islamic banks. This study finds that most of the countries, except some Asian and Middle-Eastern countries, have inconsistent efficiency trends in Islamic banking sector. It also shows that financial inclusion is significantly allied with Islamic banking efficiency. Eventually, the results propose that Islamic banks are still bearing the consequence of that economic recession and, therefore, bank should focus more on financial inclusion since those banks having sound and inclusive financial environment are seen enjoying higher level of financial efficiency.

This unique study examines the moderation effect of institutional quality (IQ) on the relationship between financial inclusion (FI) and financial development (FD) of 45 Organization of Islamic Cooperation (OIC) countries. For empirical analysis, panel data are used for the period 2000–2016. We use the Arellano–Bond generalized method of moments (GMM) and two-stage least-squares (2SLS) method in our estimations to draw multidimensional results. The empirical results confirm the significant positive relationship between FI, IQ and FD. Interestingly, we find that IQ moderates FI and has a significant positive impact on FD. Our findings are robust to alternative econometric specifications of FI, IQ and FD. Therefore, policymakers must sensibly understand the pivotal role of FI and IQ in establishing sustainable future development of OIC countries.

This study focuses on the effect of Corporate Social Responsibility (CSR) on financial inclusion behavior in rural communities. CSR in the domain of community engagement, education and livelihood initiatives, which are all referred to as ‘harmonious CSR’ in the paper. This study further explores the moderating influence of financial literacy and income on harmonious CSR-financial inclusion linkages.

A field survey of 344 rural households (CSR beneficiaries) was conducted in two districts of Uttar Pradesh, India. This study follows a two-stage approach. First, a theoretical model is constructed on the basis of a strategic review of literature in the field of social science (social work, rural development and development studies). Second, confirmatory factor analysis (CFA) is performed, followed by a hierarchical regression model to determine underlying associations. Findings reveal that harmonious CSR has a significantly positive impact on financial inclusion in the Indian rural sector. The moderating effect of financial literacy is also reflected in CSR-financial inclusion linkages. However, income is not found to have any moderating influence on the relationship between harmonious CSR and financial inclusion. Finally, this study is in favor of deepening the influence of the financial institutions so that policymakers can make informed decisions about maintaining a sustainable economic environment, especially, in the context of the rural sector where such steps are desperately needed.

This study investigates the impacts of financial inclusion on poverty and income inequality in 27 developing countries in Asia during 2004–2019 based on a composite financial inclusion index (FII) constructed using principal component analysis (PCA). The generalized method of moments (GMM) was employed for the estimation. The results show that financial inclusion can influence the reduction in both poverty and income inequality. The empirical findings also reveal the contribution of such control variables as economic growth in decreasing income disparity and trade openness in helping improve the standard of living of poor households despite its tendency to co-vary with income inequality. The present empirical evidence supporting the role of financial inclusion in reducing poverty and income inequality in developing countries has led to a policy implication that financial sector development should focus on the availability, usage, and depth of credit to cover all poor households or low-income groups to help improve their access to financial services, enable them to increase their income, and reduce the income gap between poor and rich households.

The potential for information and communication technologies (ICT) and inclusive finance to drive entrepreneurial activity in an African context remain unclear. We specifically consider effects on male versus female entrepreneurs. This study unveils new insights based on an annual panel series for 52 African countries from 2005–2019. The system-generalized method-of-moments (sysGMM) and the novel method-of-moments quantile regression (MM-QR) aided the analysis. The estimates of both procedures demonstrate that entrepreneurship in Africa is self-promoting. The sysGMM estimator demonstrates that financial inclusion produced unsubstantial effects on entrepreneurial activity. However, the estimates of the MM-QR produced varying significant positive relationships mostly at the upper quantiles for all entrepreneurs. The sysGMM reveals that ICT produced marginal positive effects for entrepreneurs in general but not for female entrepreneurs. Additionally, the MM-QR unveiled a significant positive influence of ICT at the lower and middle quantiles for aggregate levels of entrepreneurship. ICT produced significant positive effects at the lower quantiles for men, and at the upper quantiles for women. Policy options to promote entrepreneurship in the continent are highlighted.

While finance is critical for small and medium-sized enterprises (SMEs) to survive and grow, most SMEs suffer from poor access to finance. Given the pronounced global financial uncertainty, stable access to appropriate funding sources has become even more difficult for SMEs to attain. Lessons from the global financial crisis have motivated many countries to consider SME access to finance beyond conventional bank credit and to diversify their domestic financial systems. This paper uses empirical analysis to point out the limitations of traditional bank lending to SMEs and suggests possible policy approaches facilitating them to access growth capital.

Many firms in the developing world — including a majority of micro, small, and medium enterprises (MSMEs) — operate in the informal economy. The informal firms face a variety of constraints, making it harder for them to do business and grow. Lack of access to finance is often cited as the biggest operational constraint these firms face. This paper documents the use of finance and financing patterns of informal firms, highlights differences between use of finance by formal and informal firms, and identifies the most significant characteristics of informal firms that are associated with higher use of financial services.

This study provides updated modalities for ensuring equitable income distributions in developing countries. This was achieved through the lens of self-employment, information and communication technologies (ICT), and remittances. To circumvent the dark spots in prior studies, this study harnesses annual panel series for 52 African countries. The study engaged both the system generalized method of moments (sGMM) and the panel quantile regression with nonadditive fixed effects (QRPD) techniques to elicit updated insights. Meanwhile, three metrics of income inequality, the Gini coefficient, the Atkinson index, and the Palma ratio, were explored for robust insights. A key discovery from both panel computations is the self-exacerbating inclinations of income disparities in the continent. Furthermore, it was discovered that both self-employment and ICT are significant income equalization factors. However, their influence is most effective at the upper quantiles of inequality. The influence of remittance inflows is predominantly unfavorable for equitable income distribution. Both financial inclusion and government effectiveness provided varying inequality-reducing effects. Notably, their influence is more formidable at the upper quantiles. Human capital development provides some noticeable income equalization effects, particularly at the lower quantiles. Policy insights for minifying income inequality in the continent are highlighted herein.

Financial inclusion, being considered as a key enabler to reducing poverty and boosting prosperity in emerging and frontier markets such as Vietnam, is the process in which individuals and small businesses are provided with an access to useful and affordable financial products and services. The extant literature on the empirical evidence regarding the contribution of financial inclusion to macroeconomic stability is mixed. This paper investigates the linkages between financial inclusion and macroeconomic stability, which has not yet been thoroughly examined in the literature, for 22 emerging and frontier economies from 2008 to 2015, with particular focus on a potential optimal level. Using the panel threshold estimation technique, the empirical findings show that financial inclusion, as approximated by the growth rate in the number of bank branches over 100,000 account holders, is found to enhance financial stability under a certain threshold. Financial inclusion is also found to be of benefit to maintaining stable inflation and output growth. Policy implications are also discussed on the basis of the important empirical findings.

This paper investigates the effect of remittance inflows on financial inclusion. Using data from high remittance-receiving developing countries and applying dynamic panel data methods, we find that remittance inflow has a negative impact on financial inclusion for countries with low level of remittances. However, this relationship is positive for countries with high level of remittances. Our study found that there exists a nonlinear relationship between remittances and financial inclusion. We also show that the effect of remittances on the financial inclusion is conditional upon people’s perception about institutions.

Financial inclusion has allowed financial products with very high-interest rates and complex conditions to become increasingly affordable. Financial inclusion programs, which aim to reach all social strata, strongly expose financial institutions to risk and particularly credit risk. That said, additional interventions such as financial education of those included are needed. We aim to examine the impact of financial literacy and financial inclusion of households on bank performance. Specifically, we want to examine the impact of financial literacy on credit risk, competitiveness among banks and financial stability. The FGLS estimation results suggest that financial literacy and financial inclusion reduce credit risk and enhance the stability of banks, and regarding competitiveness, our results were inconclusive as they show different effects for each competitiveness indicator, although they point to improved competitiveness in some cases. This research allows policymakers to understand that individual financial attitudes can be reflected in the general welfare of financial institutions and encourages the intensification of programs aimed at improving household financial literacy.

This research explores how new financial technologies are able to resolve economic stagnation by considering two dimensions of financial technology’s spread: the spread to poor people and that to rural area people. Based on a sample of 109 countries, our findings indicate that the spread of new financial technologies to poor people not only benefits economic growth directly, but also generates an indirect positive influence on economic growth via the channel of financial institutions’ development. By comparison, the effect of spreading financial technologies to rural area people on stimulating economic growth is insignificant. Lastly, we offer some policy implications associated with the results.

This paper explores the empirical relationship between informality and several indicators of financial development (FD) and financial inclusion (FI). We exploit a panel of 152 countries with annual information between 1991 and 2017. Using panel cointegration techniques, we find evidence of a negative long-run relationship between informality and FD/FI for different groups of countries. Moreover, exogeneity tests indicate that some FD/FI indicators cause less informality. Specifically, we find that in developing countries FD reduces informality when measured as “financial credit” and “bank credit”, whereas FI reduces informality when measured as “number of bank accounts”. These results suggest that higher credit and more bank accounts have contributed to reducing informality in developing countries in the long run. Additionally, we find evidence of double causality between informality and other FD/FI indicators in developing and Latin American countries.