Abstract
Financial Inclusion is a key factor in achieving the sustainable development goals of the United Nations. The research in the area of financial inclusion is becoming more critical for scholars and policymakers. In previous studies, effects of formal institutions on financial inclusion have been explored. However, influence of informal institutions (culture) on financial inclusion remained untapped. To fill this gap, we investigate how national culture affects the financial inclusion of 81 Belt and Road economies using 17 years of data from 2004 to 2020. The empirical findings of the two-stage least square (2SLS) show that Hofstede’s cultural dimensions are significantly associated with financial inclusion with different signs and levels of magnitude. We find that financial inclusion is lower in countries where uncertainty avoidance and power distance is high and that the opposite is true for individualism and masculinity. The overall results are reliable to a series of robustness checks and provide a useful basis for policymakers, regulatory agencies, and other stakeholders in achieving the sustainable development goal of financial inclusion in Belt and Road countries.
Highlights
Financial inclusion was adopted as a policy objective by the Great 20 (G20) countries in 2010, resulting in the establishment of the Global Partnership for Financial Inclusion (GPFI)
By addressing the particular gap in the existing literature, our study focuses on the interplay between national cultural and cross-country disparities in FI using Hofstede’s four cultural dimensions as proxies for national culture
The effects of Hofstede’s cultural dimensions on FI of 81 Belt and Road (B&R) economies are studied in this study, which remained untapped in previous studies
Summary
Financial inclusion was adopted as a policy objective by the Great 20 (G20) countries in 2010, resulting in the establishment of the Global Partnership for Financial Inclusion (GPFI). They aim to provide poor individuals with “effective” access to credit, savings, payments, and insurance services in exchange for anticipated gains in national growth, efficiency, and welfare. To this aim, the World Bank has embraced FI as a tool for economic liberty for the world’s poor, poverty eradication, and economic prosperity. Even in the United States, 30% of the total low-income population is left out of the financial system [2]
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