Does Institutional Quality Improve Financial Inclusion in Sub-Saharan Africa?

Abstract

This article studies the impact of institutional quality on financial inclusion in forty (40) countries in sub-Saharan Africa over the period 2000-2017. We use the Generalized Moments Method (GMM) in dynamic panel. Three measures of financial inclusion were highlighted : the number of ATMs per 100,000 adults, the number of commercial bank branches per 100,000 adults, and the number of depositors with commercial banks per 1,000 adults. The first two assess access to financial services and the third measures their use. The results obtained that the quality of regulation, control of corruption, and government efficiency positively impact access to financial services. In contrast, the rule of law as well as expression and democratic accountability exert the opposite effect. In addition, the use of financial services is positively influenced by the quality of regulation, the rule of law and the control of corruption. However, effective government as well as democratic expression and political stability have the opposite effect. In addition, the conclusions reached stress the importance of other control variables, such as GDP per capita, private credit-to-GDP ratio and gross secondary school enrollment rate.