Role of Foreign Banks Entry in Promoting Financial Inclusion - "A Time series analysis of Five Permanent Members of UN Security Council"

Abstract

Purpose: Financial Inclusion is an essential determinant of bringing inclusive growth, which is promoted by the foreign bank entry as it increases the market competition and brings about greater outreach. Foreign Bank Entry has been considered as an impediment towards domestic markets, which is misunderstood. Foreign banks bring higher assets and provide credit to government-owned enterprises, Small and Medium Enterprises, and Micro Credit. Most developed countries have understood this phenomenon and have achieved significant financial Inclusion by liberalizing their banking industry. It is essential to conceptualize and measure the magnitude of factors, determinants, and antecedents for foreign bank entry promoting financial Inclusion. Methodology: An empirical research methodology has been adopted using the Normality test, data diagnostics for Regression, Unit Root Test, Bounds Co-Integration Test, Long Run Coefficients, and ARDL to explore the determinants of the entrance of foreign banks to promote financial Inclusion. Data has been taken from 5 developed countries, United Nations Security Council's permanent members with Veto Powers including (United Kingdom, United States, Russian Federation, France, and China) for 15 years from 2005-2018, making it sample 75 (n=75) for each of the eight variables under study. Findings: The results confirm that all the variables significantly affect the level or first-order difference in the financial Inclusion caused by foreign bank entry. Originality: This study is the author's original work and is not the exact replication of any prior study; this study provides empirical evidence and discusses the literature on Financial Inclusion and Foreign Bank Entry.