Macroeconomic soundness and financial inclusion: catalysts for developing robust financial markets in emerging economies

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ABSTRACT This study examines the relationship between financial inclusion and financial market development in emerging economies, emphasizing macroeconomic conditions. Using panel SGMM and Granger causality, it finds that financial inclusion fosters financial market growth, with stronger effects in robust macroeconomic environments. Financial inclusion positively or neutrally impacts banking and capital markets, amplified by sound macroeconomic factors. The findings highlight the importance of inclusive financial systems for advancing financial markets, influenced by national savings, trade, private capital flows, and regulatory quality.