Unlocking Desire: Exploring the Impact of Seductive Forces of Political Risk, Financial Inclusion, and Competition on Bank Stability in Emerging Markets

Abstract

This research inquiry overlaps financial services inclusion and a national government's risk of political instability, competition, and banking system stability. It is the analysis of 22 emerging market countries from 2016 to 2021. The research is going to be based on GMM-System dynamic data panel estimate method and the aim is to illuminate the interplay of these factors and to detect their impact on the banking industry sustainability. The point estimates derived from the GMM-System estimation reveal that several of the main conclusions have been reached. The main point to note is that, in general, the more inclusive financial system, the more stable banking sector there will be in the world. What this finding stresses is the necessity of an inclusive financial system to strengthen banks by being a part of the ever-growing body of evidence on how financial inclusion can foster economic growth and stability. Not only does the evidence support the assumption that political unrest and financial markets have a strong relationship, but also the numbers show that this relationship is highly likely. In the case of a country where political instability is reduced, the financial sector turns out to be more viable, the study reveals. Political risk is of a great significance for financial markets and banking systems, and therefore call for political stability as a fundamental for the reliable banking system. Taken together, the finding of the study will be very useful for not only government officials but also the banking sector. The output reaffirms the fact that financial inclusion, competition and political risks are the key components for the sector stability increase. Such factors have a very important influence on the policy, regulation, and strategic decision of banking. These findings show the imperativeness of political and corporate leaders to make progress in increasing financial accessibility, allowing fair competition, and safeguarding political stability so that banking sectors may be reinforced and thus, the world's banking systems may become more resilient.Keywords: Political Risk, Financial Inclusion, Bank Stability, Emerging Economies, Competition.