INCLUSIVE FINANCE, GROWTH AND SOCIO-ECONOMIC DEVELOPMENT IN SAUDI ARABIA: A THRESHOLD COINTEGRATION APPROACH

After 65 years of independence, large sections of Indian population still remain unbanked. This has led generation of financial instability and lower income group who do not have access to financial products and services. However, in the recent years the government and Reserve Bank of India has been introduced the concept and idea of financial inclusion.Financial inclusion is an important method of economic development of a nation. Financial sector inclusion is very important component of inclusive growth strategy. Financial inclusion can be described as the delivery of banking and other financial services at affordable costs to the vast section of the disadvantaged and low income groups. It plays very vital role in economic progress. Financial sector inclusion helps in eliminating poverty, reducing inequality, eliminating unequal access to opportunities, reducing inequalities of choice. This study tries to understand policy initiatives by the govt for financial inclusion, reasons for financial exclusion, steps taken by the government for financial inclusion and implications of financial inclusion. This study is mainly based on secondary data and collected information from books, journals and website.

This paper examines the causal relationship between financial inclusion, institutional quality and inclusive growth within a four-variate ARDL-EC framework and forecast error variance decomposition technique for the period of 2003-2018 using quarterly data in Nigeria. The paper incorporates two variables to capture institutional quality (government effectiveness and regulatory quality) in order to eliminate variable omission bias in which most existing studies are characterised. Those adopted techniques confirm the long-run and bi-causal relationships mainly between financial inclusion and inclusive growth in Nigeria. In addition, bi-directional causal relationships of the outcome of the study are also established between financial inclusion and government effectiveness, likewise between inclusive growth and regulatory quality mainly in the short-run. The results based on the model and empirical outputs suggest that for the authorities of this economy to achieve and sustain equitable growth, fully disciplined policies that can promote and enhance financial inclusion and inclusive growth of the greater proportion of the population should not be managed and handled by loosed hands
 This paper examines the causal relationship between financial inclusion, institutional quality and inclusive growth within a four-variate ARDL-EC framework and forecast error variance decomposition technique for the period of 2003-2018 using quarterly data in Nigeria. The paper incorporates two variables to capture institutional quality (government effectiveness and regulatory quality) in order to eliminate variable omission bias in which most existing studies are characterised. Those adopted techniques confirm the long-run and bi-causal relationships mainly between financial inclusion and inclusive growth in Nigeria. In addition, bi-directional causal relationships of the outcome of the study are also established between financial inclusion and government effectiveness, likewise between inclusive growth and regulatory quality mainly in the short-run. The results based on the model and empirical outputs suggest that for the authorities of this economy to achieve and sustain equitable growth, fully disciplined policies that can promote and enhance financial inclusion and inclusive growth of the greater proportion of the population should not be managed and handled by loosed hands

This study set out to investigate the role played by human capital development in the nexus between financial inclusion and economic growth in Africa. We use GMM as the estimation technique to analyze country-level data pooled from 40 African countries from 2005 to 2018. The findings suggest the presence of a non-linear U-shaped relationship between financial inclusion and economic growth. It was also found that human capital development fully mediates the relationship between financial inclusion and economic growth in Africa. Hence, the growth-enhancing benefits of financial inclusion are transmitted through human development. Whilst pursuing their financial inclusion targets, efforts should be made by governments across the African continent to simultaneously improve the level of human capital development to realize the positive benefits of financial inclusion.

Economic growth, both local and global, is no longer regarded as a measure of a state or country's wealth, this is because economic growth is usually accompanied by inequality, poverty, and joblessness, which becomes a poor measure of a country’s wealth, hence the need for economic growth that is inclusive. This study examines the impact of financial inclusion on inclusive growth in Nigeria from 1990 to 2024 using the Non-Linear Autoregressive Distributed Lag technique; the study utilized insurance and financial services, monetary sector credit to private sector and remittances as measures of financial inclusion while real GDP per capita captures inclusive growth. This study used time series data sourced from the Federal Reserve Economic Data, NBS, CBN database, and WDI with the new growth theory as its theoretical framework. The findings reveal that infrastructural investment and insurance financial services exhibited a significant relationship with RGDP per capita in both the long and short run terms. The long-term analysis established a significant positive relationship which posits that inclusive financial policies contribute positively to GDP per capita, albeit in the long run, while the short run was statistically insignificant, signifying that the immediate effects of financial inclusion might not be prominently observed in increasing GDP per capita. This study highlights potential nuances within the Nigerian economic landscape and suggests that despite the current lack of discernible effects on RGDP per capita in the short-run, financial inclusion initiatives could be instrumental in laying the groundwork for future economic stability at the long run, which will generate a more conducive environment for inclusive growth in Nigeria.

Financial Inclusion and Inclusive Growth in Nigeria: A Critical Appraisal for Evidence Based Policy

The growing concern over socioeconomic challenges in developing economies has intensified scholarly attention on how financial inclusion and institutional quality interact to influence economic growth in Sub-Saharan Africa. Despite extensive literature on finance-growth and institutions-growth relationships, limited empirical studies simultaneously examine how financial inclusion and institutional quality jointly address socioeconomic challenges within the Sub-Saharan African context using recent panel data and robust dynamic estimation techniques. Therefore, this study investigates the extent to which financial inclusion and institutional quality influence economic growth in selected Sub-Saharan African economies. The analysis is based on annual statistical data covering 20 Sub-Saharan African countries for 2008–2024. The empirical analysis employs descriptive statistics and the two-step system generalized method of moments (system GMM) estimation technique to address potential endogeneity and dynamic relationships. The results reveal that financial inclusion exerts a positive and statistically significant effect on economic growth when measured by real GDP, indicating that greater access to financial services stimulates productive economic activities in the region. Furthermore, institutional quality demonstrates a positive and significant relationship with GDP growth rate and per capita real GDP, suggesting that improvements in governance structures enhance economic performance across the sampled economies. However, when economic growth is proxied by real GDP, institutional quality shows a negative but statistically significant coefficient of about 0.18, highlighting the complex and heterogeneous institutional dynamics within Sub-Saharan African economies. Additionally, the analysis indicates that the COVID-19 pandemic significantly reduced GDP growth and per capita real GDP, with a negative mean difference exceeding 2.5 percentage points between pre- and post-pandemic periods, confirming the vulnerability of regional economic performance to global shocks. These findings provide important policy insights and open new avenues for research and policy design aimed at addressing socio-economic challenges through improved financial inclusion strategies and stronger institutional frameworks in Sub-Saharan Africa.

Purpose Financial inclusion is one of the key enablers of economic growth, poverty alleviation and consequently achieving inclusive growth. This paper examines the causality between financial inclusion and inclusive growth in Egypt during the period (2004–2022). Design/methodology/approach To achieve our aim, we first construct the financial inclusion index and a multidimensional inclusive growth index for Egypt using principal components analysis. Second, we use the Toda–Yamamoto test to examine the causality between the two indices. Findings The results reveal that the inclusive growth index experienced an upward trend over the study period, while the financial inclusion index has increased since 2018. The results of the Toda–Yamamoto test indicate bidirectional causality between financial inclusion and three of the sub-indices of inclusive growth, as well as the overall inclusive growth index. Research limitations/implications The empirical evidence highlights that financial inclusion efforts will not achieve their targeted outcome unless a simultaneous inclusive growth strategy is conducted. Moreover, improving governance indicators is crucial to promoting inclusive growth. Originality/value Although the relationship between financial inclusion and economic growth has been widely investigated, its relationship with inclusive growth remains unexplored. The novelty of this study resides in constructing two composite indices of financial inclusion and inclusive growth in Egypt and testing the relationship between them. Peer review The peer-review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2024-0667

PurposeThe purpose of this paper is to assess the dynamic impact of financial inclusion on economic growth for a large number of developed and developing countries.Design/methodology/approachThis study uses some panel data models such as country-fixed effect, random effect and time fixed effect regressions, panel cointegration, and panel causality tests to examine the linkage between financial inclusion and economic growth. Panel cointegration is being used to test the long run association between financial inclusion and economic growth, whereas panel causality test is used to find the direction of causality between financial inclusion and economic growth. The data on financial inclusion are taken from Sarma (2012) for the period 2004-2010.FindingsThe empirical findings reveal that there is a positive and long run relationship between financial inclusion and economic growth across 31 countries in the world. Further, panel causality test shows a bi-directional causality between financial inclusion and economic growth Thus, the study confirms that financial inclusion is one of the main drivers of economic growth.Research limitations/implicationsThis study has two limitations. First, this study considers only banking institutions in the analysis. Second, the period tested for the long run relationship is not long enough.Practical implicationsThis study empirically measures the quantitative impact of financial inclusion policies pursued across the world. The study also suggests that policies emphasizing financial sector reforms in general and promoting financial inclusion in particular shall result in higher economic growth in the long run.Originality/valueThis study attempts to assess the long run relationship between financial inclusion and economic growth with the help of a multidimensional index of financial inclusion. Therefore, this can be a valuable contribution to the banks and policymakers.

Financial inclusion has become a policy agenda for financial stability and sustainable economic growth for the developing world. However, there seems to be a lack of consensus across the literature on the relationships between financial inclusion, financial stability and economic growth. Given the divergent views, this paper aims to examine the causal relationships between financial inclusion, financial stability and economic growth in the Sub-Saharan African (SSA) countries. In this study, panel data were used for twenty six selected SSA economies and a principal component analysis (PCA) was applied to construct a composite index for financial inclusion. In addition, an autoregressive distributed lags (ARDL) cointegration test was applied to examine the short- and long-run relationships between the variables of interest. Separate and joint Granger causality tests were used to assess the direction of causality. The result of the study indicated that there are both short-run and long-run relationships between financial inclusion, financial stability and economic growth in the SSA countries. Moreover, the Granger causality tests revealed that there are separate two-way causalities and joint uni-directional causalities, indicating complementarity between these variables. It is, therefore, necessary for policy makers, regulators and financial sector advisors to follow a holistic approach while developing and implementing policies and strategies that promote financial inclusion in order to attain sustainable economic growth in the region.

This study delves into the significant roles played by financial inclusion and human capital development as catalysts for global economic growth, with a specific focus on their contributions to Nigeria's economic landscape. The analysis uses secondary data obtained from the National Bureau of Statistics and the World Bank covering the period 2000–2024. A Pooled Ordinary Least Squares (OLS) estimation technique was employed to assess the relationships among the variables. The findings reveal that bank account penetration (BAP) has a positive and significant effect on Nigeria’s GDP growth (? = 15.28430; p < 0.05), indicating that a unit increase in access to formal banking services leads to a 15.3% rise in GDP. Similarly, literacy level (DL) positively influences GDP growth (? = 9.557163; p < 0.05), demonstrating the essential role of human capital development. In contrast, inflation (LI) exerts a negative and significant impact on GDP (? = –21.48206; p < 0.05), as does poverty level (LP) (? = –19.80323; p < 0.05), implying that increases in either variable reduce economic growth. Thus, the study comes to the conclusion that human capital development and financial inclusion have a significant impact on Nigeria's financial industry and economic growth. The study also emphasizes how crucial it is to promote human development and financial inclusion as necessary components of long-term economic growth. Recommendations include advocating for the Central Bank of Nigeria to intervene in reopening closed branches of deposit money banks nationwide, particularly in rural areas. Additionally, the federal government is urged to address economic policies contributing to inflation, naira deregulation, and an increase in the poverty rate, the study also underscore the need for sustained policy efforts that expand financial access and strengthen human development as foundations for long-term economic growth in Nigeria.

The process of economic growth must strive to include participation from all sections. In India, inclusive growth has always been a priority. The agenda of inclusive growth is reflected in the kind of policies and regulations that the policymaking and regulating institutions have been developing over the past decade. From Agricultural Economy to developing economy, India has come a long way in implementing financial sector reforms especially related to financial inclusion. The motive is economic growth. The present study was done to find the causal relationship between India’s financial inclusion and economic growth and household debt and economic growth using indicators for financial inclusion, household debt, and economic growth. The relationship was checked using the linear regression technique. The results indicated that only three out of ninety-six indicators of financial inclusion affected economic growth but. Household debt and economic growth have a negative relationship. The results have serious policy implications in India as India is moving towards financial inclusion.

PurposeThe purpose of this paper is to examine the relationship between financial inclusion (FI) and economic growth in India.Design/methodology/approachTo measure FI, a multidimensional time-varying index is proposed following the Human Development Index method. The long-run relationship between FI and economic growth is examined by using the autoregressive distributed lag (ARDL) approach to cointegration and nonlinear ARDL approach. Further, the direction of causality is investigated by employing the Toda–Yamamoto Granger causality test.FindingsThe linear cointegration test confirms a long-run relationship between FI and economic growth for India. The improvement in both demand-side and supply-side financial services has a positive impact on economic growth. These results suggest that India can attain long-run economic growth by improving the coverage of FI. However, there is no evidence of nonlinear cointegration, indicating that there is no asymmetric effect of FI on economic growth. Further, the causality test shows that FI granger causes economic growth but not vice versa.Research limitations/implicationsThe major limitation of the study is the availability of time series data for all important variables. The index for both demand- and supply-side indicators can be extended with several other important variables in later date once the data are available for those variables.Practical implicationsAs the study confirms that FI is one of the main drivers of economic growth, it is suggested that the policy maker emphasizing on financial sector reforms can enjoy economic growth in the long run, especially in developing countries. Therefore, the government and policy makers need to address the issues involved in access to financial services to spur economic growth.Originality/valueThe study examines the long-run relationship between FI and economic growth employing ARDL bound testing approach and nonlinear ARDL approach, separately for demand-side and supply-side indicators. Further, the study uses the Toda–Yamamoto granger causality to find the direction of causal flow between FI and economic growth.

This study examines the relationship between financial inclusion and income inequality in Nigeria from 1985 to 2022. The ARDL (Autoregressive Distributed Lag) and Granger causality tests were used with data from the central bank statistical bulletin and the World Bank. The results revealed a significant and negative relationship between financial inclusion and income inequality, suggesting that increased access to financial services contributes to a reduction in income disparities in both the short and long run. Human capital variables, such as education expenditure (NE) and employment levels (UNEMP), also play crucial roles in reducing inequality, highlighting the importance of investing in education and job creation to complement financial inclusion efforts. Public health expenditure (HLTEXP) and economic growth were found to contribute to the reduction of inequality; inflation worsens it, particularly affecting low-income households. The Granger causality test indicates that financial inclusion, especially through the expansion of commercial bank branches, significantly influences income inequality, affirming the importance of financial inclusion in mitigating income inequality. The study concludes that financial inclusion, coupled with supportive investments in education, employment, health, and macroeconomic stability, can significantly reduce income inequality in Nigeria. We recommend that access to financial services be expanded and enhanced human capital development to ensure inclusive and sustainable economic growth.

This article empirically investigates the quantitative relationship between financial inclusion and inclusive growth in the East Africa Region. The study employs Driscoll and Kraal's augmented fixed effects estimation technique to analyze data from 2011 to 2021 for five Eastern African Countries. The results show that inclusive growth is positively impacted by financial inclusion. In terms of usage of financial services by gender, on average, a percentage increase in female account ownership and male account ownership will lead to a 0.025% and 0.024% increase in inclusive growth, respectively. The study also found a link between prosperity and inclusive development. This data emphasizes the need for the creation of special agents' tools to provide financial services to the underprivileged and women, as well as the recommendation that financial institutions implement programs to raise adult populations' financial literacy in order to increase access and usage of financial services.Nexus Between Financial Inclusion and Inclusive Growth, The East Africa Case Study

This study examines the short and long-run relationships between financial development, integration, inclusion, and economic growth in SADC, as well as the corresponding threshold levels. Covering the period 1995 to 2020, the ARDL technique was used to test for co-integrating relationships, and the GLS was utilized for the determination of the respective threshold levels. The study establishes that bank credit to the private sector negatively affects economic growth in the long run. Most SADC countries were still operating below their respective minimum financial development threshold levels. It is observed that there are no threshold levels for financial integration in SADC, although the result, compared with the threshold levels of financial development seems to suggest that the financial domestic system and some level of economic development are a prerequisite for financial integration decisions. The financial inclusion threshold level for poor SADC countries is low. Yet most of these countries had the highest mobile banking facilities in the region. One possible indication can be that these countries may be operating at financial inclusion levels detrimental to economic growth. Financial development, along with its facets of financial integration and financial inclusion, is found to be the driver of economic growth in SADC. SADC countries, therefore, need to establish a strategic mix of these facets of financial development for the realization of significant economic growth.