Governance Indicators Research Articles

The Importance of Governance and Audit Committee in ESG Reporting Within the Aerospace Industry

In the context of the global situation, against the backdrop of a rather marked instability and perhaps inappropriate behavior of mankind in recent times, as well as climate instability, the study aims to analyze the relationship between the presence of corporate governance, the existence and expertise of the AC as well as reporting on environmental, social and governance (ESG) indicators within the aerospace industry globally, taking into account long-term environmental objectives at global level, such as net carbon emissions to tend towards zero by 2050. The data analyzed were extracted from the Refinitiv Eikon database using, globally, from which a sample of 368 public companies in the aerospace industry was extracted, analyzed over a period of 4 years, respectively 2019-2022. As a methodology used in the research, a linear regression model was used, analyzing the linear relationship between the existing corporate governance dependent variable and the independent variables: the existence of the AC, the AC's expertise and the ESG score. This research contributes to the literature on the reporting of indicators (ESG) by aerospace companies, in which regulators do not play a dominant role in determining the degree of disclosure. Probably, in the future it will be necessary for most companies to realize that transparency in reporting contributes to a balance in the world and humanity would benefit if the polluters would reduce their intensity. In conclusion, corporate governance and the AC can play a key role in the effectiveness of ESG indicators reporting in the aerospace industry, which would lead to sustainable practices and contribute to the industry's efforts to address global environmental challenges.

The impacts of World Governance Index on Global Peace Index between 2008 and 2022

PurposeWhile many factors contribute to peace, economic and governmental factors are considered essential litmus tests for determining peace levels. This study aims to examine the impacts of World Governance Index (WGI) variables on the Global Peace Index (GPI) which ranges from 0 (very high) to 5 (very low).Design/methodology/approachThe GPI serves as a key indicator of peace levels. Valid data from two databases covering 161 countries from 2008 to 2022 were collected and analyzed by using a logarithmic panel data regression model. This approach ensures robust results, particularly when endogenous and exogenous variables have different measurement units.FindingsAccording to the Feasible Generalized Least Squares (FGLS) estimators, five WGI components exhibit inverse relationships with the GPI (increasing WGI components leads to a decline in GPI, indicating an enhancement in peace quality). The most significant factor influencing peace is “Political Stability and Absence of Violence/Terrorism”, while the effects of “Voice and Accountability” and “Control of Corruption” are also noted.Originality/valueExtant studies have largely overlooked the interaction between governance and peace, often relying on regional data (with neighboring countries) or case studies on local solutions. This paper, based on data from 161 countries, evaluates governance quality and its dimensions in relation to peace conditions on a global scale, providing more generalizable results for policymakers and scholars.

Corporate Governance, ESG, Audit Committee and Financial Performance in European Investment Holding Companies

The purpose of this research paper is to explore the connection between Corporate Governance, Environmental, Social and Governance (ESG), Audit Committee (AC) and Financial Performance in European Investment Holding Companies. This paper aims to understand whether there is a correlation between these elements. The study answers the following research question: "What is the impact of corporate governance indicators, ESG and financial performance on investments in public holding companies in Europe?" Our findings reveal significant correlations between corporate governance structures and financial performance metrics, as well as the influence of ESG ratings on financial performance and corporate governance. Additionally, we identify the effects of audit committee characteristics on financial performance and ESG outcomes. The reported data is collected from a sample of companies included in the Refinitiv Eikon Database and analysed using a panel data analysis at both regional and industry level. The sample is composed of 228 European Companies, covering a period of 4 years, from 2019-2022. I chose this because it includes the impact of the pandemic and the post-pandemic recovery period, providing insight into the adaptability and resilience of companies in the face of major economic challenges.This research contributes to a deeper understanding of the dynamics between corporate governance, ESG practices and financial performance, providing valuable insights for investors, managers and regulators aiming to navigate sustainable investment strategies in the European market. This sample is considered large enough to provide meaningful data and draw relevant conclusions. Companies from various European countries were included to reflect the diversity of the market and to analyse variations in governance and ESG practices in different national contexts. The focus on public holding companies provides a specific perspective on how these entities manage corporate governance and ESG, given their importance in the European economy. The selection of the sample was based on the availability of financial and corporate governance data to ensure the reliability and validity of the analysis. This data will be used to investigate how governance and ESG practices influence companies' financial performance, thus providing important insights for understanding the relationship between these aspects within the European market.

Shadow Economy and Environmental Sustainability in Global Developing Countries: Do Governance Indicators Play a Role?

Environmental sustainability has been a challenging issue all over the globe, with air pollution posing a significant threat. One main factor contributing to air pollution is the growth of the shadow economies. This study investigates the effect of the shadow economy on air pollution and explores how these effects depend on the levels of governance indicators. We utilize key air pollution indicators: carbon dioxide (CO2) and nitrous oxide (N2O) emissions. Furthermore, we examine the role of key governance indicators: corruption control, the rule of law, and regulatory quality. The study utilizes an annual panel dataset of 107 selected developing countries worldwide, spanning from 2002 to 2020, and employs the System GMM technique, which effectively tackles the omitted variable bias, potential endogeneity, and simultaneity issues in the model. The estimation results indicate that a sizeable shadow economy significantly increases the levels of CO2 and N2O emissions. Moreover, the results reveal that robust governance frameworks, evidenced by enhanced corruption control, a stronger rule of law, and superior regularity quality, mitigate the adverse effects of the shadow economy on CO2 and N2O emissions. This highlights a significant substitutability between the shadow economy and governance indicators, indicating that improvements in governance formworks will not only reduce the size of the shadow economy but also weaken its harmful impact on air pollution. Policy initiatives should thus focus on strengthening governance mechanisms, particularly enhancing control of corruption and the rule of law to effectively reduce the environmental impact of the shadow economies in developing countries. Additionally, governments should prioritize reforms in regulations and legal frameworks to limit the expansion of the shadow economy, thereby decreasing their contribution to air pollution.

UNVEILING THE FACTORS BEHIND THE SHADOW ECONOMY: A GLOBAL INVESTIGATIONSURVEY UTILIZING PANEL DATA ANALYSIS

The paper addresses the topic of the shadow economy and the socio-economic factors that influence it. By reviewing relevant studies, we will observe that a variety of factors play a role in shaping this economy. Using a dataset comprising 50 countries from around the world, monitored over 13 years, we conducted an analysis to determine which of the discussed factors most significantly impact the level of the shadow economy. The OLS model shows a positive relationship between income inequality, the unemployment rate and the shadow economy and a negative relationship between the World Governance Index, income inequality and the shadow economy. We will find that this model will have autocorrelation problems that might influence the significance of the coefficients. Our main model (the GMM one) addresses autocorrelation and heteroskedasticity but shows some different outcomes. The findings can serve as a valuable resource for other researchers or even governments, helping to identify what changes are needed to reduce the share of the shadow economy. By the end of this research, we will have identified the key areas that need enhancement and growth to effectively address and reduce the shadow economy.

Role of Financial Development and ICT in Promoting Inclusive Growth in South Asia: Moderating Effects of Governance

The primary purpose of this study is to compute the index for inclusive growth by taking into account the indicators of poverty, income inequality, labor productivity, life expectancy, job creation, and climate. Calculating the index accomplished by the utilization of principal component analysis in order to acquire weights. Further in the study, the influence of financial development, governance, consumption, and economic growth on inclusive growth for selected south Asian economies (Pakistan, Bangladesh, India, Bhutan, Sri Lanka, and Nepal) is measured. The data is gathered from the World Development Index (WDI), the World Governance Index (WGI), the Internet Subscriber Database, and the International Monetary Fund Development Database. Due to the fact that the data spans from the year 2000 to the year 2023 and that missing values are interpolated through the use of trend projection, a fully balanced panel data sheet has been generated. Through descriptive statistic and VIF, prerequisite information is gathered to see the robustness of model. When it came time to make a decision on the unit root testing, the cross-sectional dependency test utilized to seek guidance. According to the findings, there is no evidence of cross-sectional dependency, and the first generation of unit root tests utilized. The stationarity results of mixed order of integration and T>N indicate the use of panel ARDL. Additionally, in order to see the influence that governance has on inclusive growth in connection to financial development, the moderator effect of governance also inquired. Based on the findings, it is concluded that regulatory quality is not playing a significant moderator role of the financial development towards inclusive growth in selected economies of south Asia. Drawing the inferences from the results of the study it is suggested that to expand the financial inclusion by supporting the digital financial services particularly in marginalized areas.

Is natural resource wealth a boon or a bane? The impact of oil rents and foreign direct investment on economic growth in Kazakhstan

The nexus between foreign direct investment, natural resource endowment, and their impact on sustained economic growth, is contentious. This study investigates the resource curse hypothesis and the effects of FDI on economic growth in Kazakhstan. The study covers the period from 1990 to 2022 and employs the Autoregressive Distributed Lag (ARDL) model and Toda-Yamamoto causality methods. The Bounds cointegration results reveal the existence of long-term equilibria between per capita GDP and the predictors. The findings reveal a significant impact of oil rents on economic growth, contradicting the resource curse hypothesis and suggesting a resource boon instead. In stark contrast, the impact of FDI on Kazakhstan’s economic growth is found to be insignificant, despite the presence of a causal nexus. Furthermore, economic freedom and export diversification have a positive significant impact on economic growth, while inflation exhibits a negative but significant impact. Although governance has a direct impact on GDP per capita, it is deemed insignificant, as the negative average governance index implies poor governance. Expectedly, the result establishes a causal effect between export diversification, economic freedom, governance, oil rents, and economic growth. This underscores the fundamental role played by the interplay of diversification, economic freedom, governance, and oil rents in fostering sustainable economic growth. In addition, economic freedom stimulates gross fixed capital formation, indicating that it enhances domestic investment. Notably, the findings refute the crowding-out effect of FDI on domestic investment in Kazakhstan. Consequently, to escape the resource curse and the Dutch disease syndrome, the study advocates for enhancing good governance capabilities in Kazakhstan. Thus, we recommend that good governance could reconcile the twin goals of economic diversification and deriving benefits from oil resources, ultimately transforming oil wealth into a boon in Kazakhstan.

ISO 14000 as a driver of sustainability: Exploring its alternative drivers beyond ISO 9000 standards

This study replicates and extends Corbett and Kirsch (2001) and Vastag (2004) using a new data set to investigate the drivers of ISO 14000 certification diffusions using decision tree analysis. The findings indicate that at the national level, ISO 14000 certification diffusions are influenced by factors other than ISO 9000 certification diffusions, such as the number of environmental treaties signed and ratified, industrial activities as a percentage of GDP, and GDP per capita, thus provides a range of managerial insights and enhances scholarly understanding of sustainability beyond the influence of ISO 9000. Future studies might extend the countries included in this study to see if the results are the same. Future research may include other factors like a country’s Environmental, Social, and Governance (ESG) indicators to better understand its commitment to sustainability, including environmental sustainability. The country’s culture may influence customers, investors, and other stakeholders’ knowledge and desire for sustainable practices and inspire firms to obtain ISO 14000 certifications. Since larger firms may seek ISO 14000 certification, future studies may evaluate the influence of the number of large firms in various countries as drivers of ISO certification diffusions.

Governance, foreign investment, and growth: the impact of governance indicators, foreign direct investment, economic expansion, and industrialization on carbon emissions

Governance, foreign investment, and growth: the impact of governance indicators, foreign direct investment, economic expansion, and industrialization on carbon emissions

The Sustainable Development Index: An Integration of the Ecological Framework Considering the Governance-development Nexus

This paper aims to enhance the formulation of the Sustainable Development Index (SDI) by introducing a further correction term, governance lack (GL) index, in additional to the ecological impact index (EII). The GL considers a country’s governance lack by calculating a governance index (GI) with the World Governance Indicators (WGIs) starting from 1996. The SDI(g) retains the original formula of the SDI, thus remaining an indicator of strong environmental sustainability but adequately considering in its formulation the differences significant in countries’ governance climate. Finally, graphical relationships between DI and GI, and DI and (EII + GL) are shown, and the existence of these relationships are tested with WLS and nonparametric regressions. Our findings show that significant differences in country ranking were found; the graphical relationships are empirically proven; and countries with a worse GI have been further penalized in the SDI(g) ranking.

The Impact of Carbon Awareness, Country-Governance, and Innovation on the Cost of Equity: Evidence from Oil and Gas Firms

The present paper explores the impact of carbon awareness on the cost of equity (COE) with a keen focus on the influence of country governance and innovation factors. Drawing on Bloomberg data spanning from 2011 to 2022, our analysis encompasses 263 firms within the Oil and Gas sector across 50 countries, culminating in 2,122 annual observations. Through the employment of a comprehensive suite of regression analyses—including median regression, M-estimator regression, and MM-estimator regression, alongside Firm-Fixed Effect and Reverse Causality Models—we uncover a consistently negative association between carbon awareness and COE. Our investigation further assesses the effect of country-level governance on COE, revealing a universally negative correlation. Among governance indicators, regulatory quality emerges as a particularly significant factor. Similarly, we observe a consistent negative relationship between country-level innovation and COE, reinforcing the significance of national innovation capabilities in financial performance metrics. These findings remain robust across a range of tests, underscoring their reliability and relevance. The study is important for policymakers, investors, managers, and strategic environmentalists.

Do governance indicators have a role in remittances-growth nexus in Egypt?

Purpose ― Drawing on annual data from 1996 to 2022, this study aims to examine the effect of Egypt’s real GDP growth. Methods ― Autoregressive Distributed Lag (ARDL) and Cointegration technique are applied by first examining the stationarity of the series by utilizing the Augmented-Dicky-Fuller (ADF) unit root test. The bound cointegration test is then implemented to evaluate the existence of cointegration among the variables. Findings ― The results indicate that the GDP growth rate has a long-run positive relationship with remittance inflows in Egypt. This paper also finds that the average governance indicators in Egypt, which include government effectiveness, political stability, control of corruption and regulatory quality, voice and accountability, and the rule of law, could help facilitate the long-run effect of remittances on GDP growth. Implication ― The findings imply that maintaining high levels of governance indicators is essential for helping Egypt benefit from remittances and enhancing its economic growth.Originality/value ― The study is a pioneer in including the average governance indicators in the remittance-growth nexus study for Egypt. Its purpose is to assess whether governance quality affects the nexus and whether there exists a threshold for the average governance indicators below which the flow of remittances does not encourage economic growth.

The Interconnectedness of Earnings Management, Corporate Governance Failures, and Global Economic Stability: A Critical Examination of the Impact of Earnings Manipulation on Financial Crises and Investor Trust in Global Markets

This study critically examines the interconnectedness of earnings management, corporate governance failures, and their impact on global economic stability and investor trust. Focusing on the Enron (1993–1995) and Wirecard (2015–2019) scandals, the research identifies key financial and governance indicators that contributed to these collapses, including CEO duality, weak board oversight, and manipulated financial reporting. Data for the analysis were drawn from corporate financial reports, macroeconomic indicators sourced from the World Bank, and stock market data from MarketWatch. Financial ratio assessments and regression models reveal a statistically significant negative relationship between GDP growth and abnormal returns for Enron (p = 0.014), while inflation had a strong positive impact on abnormal returns in both cases (p < 0.001). Time series analysis was applied to assess the macroeconomic consequences of corporate collapses on global financial markets. The findings demonstrate how declining GDP growth and rising inflation amplify market responses to governance failures. Recommendations include enhancing corporate governance frameworks, intensifying regulatory enforcement, and fostering global regulatory cooperation to safeguard financial markets and restore investor trust.

ESG Meets DeFi: Exploring Time‐Varying Linkages and Portfolio Implications

ABSTRACTThis study delves into the connection between Environmental, Social and Governance (ESG) indices and emerging Decentralised Finance (DeFi) assets. Specifically, it explores the ever‐changing, frequency‐based linkage between these ESG indices and innovative DeFi assets. Employing the wavelet coherence technique, we analyse a broad range of ESG indices, spanning emerging, developed and US indices, alongside various DeFi assets. This examination covers a period encompassing the COVID‐19 pandemic and the Russian‐Ukrainian conflict to assess market linkages during extreme events. We then calculate optimal weights and hedge ratios for ESG‐DeFi asset pairs to evaluate portfolio implications. Wavelet analysis results frequently show no connection between ESG indices and DeFi assets, underscoring the diversification benefits of adding DeFi to an ESG portfolio. However, this relationship notably strengthens at the pandemic crisis's onset, indicating DeFi assets lose diversification potential during turbulent times. Portfolio allocation should mainly favour ESG indices during normal periods, with minimal variations in optimal weights pre‐ and post‐COVID. Meanwhile, hedge ratio analysis suggests DeFi assets make sound investments during crises, although hedging costs increase during turbulent periods. These findings hold relevance for investors, portfolio managers and policymakers.

Agency conflicts, product market competition and investment efficiency: new evidence from emerging market

PurposeThis study examines the influence of product market competition on investment inefficiency of Indian firms in context of agency problems. Additionally, this study also investigates whether intense competition is a substitute for or complementary to corporate governance in reducing investment inefficiency of firms.Design/methodology/approachUtilizing the residuals extracted from Biddle et al. (2009) investment model, investment inefficiency, overinvestment and underinvestment are measured for 506 non-financial Indian listed firms with 6,998 firm-year observations from 2009 to 2022. Product market competition is measured using various proxies such as the Herfindahl–Hirschman index, top-four firm concentration ratio, total number of firms in industry, industry market size, weighted average of entry costs and research and development (R&D) to sales ratio. Firms' internal governance is measured using a newly corporate governance index developed with 65 new governance stipulations. Several pooled ordinary least squares (OLS) panel regressions were estimated involving investment inefficiency of firms, product market competition, governance index and firm-specific variables. Endogeneity issues were addressed through two-stage least squares. Robustness checks were also conducted using a two-step system generalized method of moments (GMM).FindingsThe main finding of the study indicates that heightened product market competition reduces investment inefficiency, overinvestment and underinvestment among the selected Indian firms suggesting that firms facing intense competition are less prone to invest below or above optimal levels. This is primarily because in highly competitive industries, managers face greater liquidation risks, prompting more efficient capital investment decisions. The results also indicate that robust corporate governance significantly mitigates investment inefficiencies in non-competitive industries compared to competitive ones suggesting heightened competition reduces managerial slack, resulting in diminished benefits from good governance in competitive settings. Overall results indicate a substitution effect between corporate governance and competition in reducing investment inefficiency, with robustness across various empirical specifications, industry classifications and alternative competition and inefficiency measures.Practical implicationsThe evidence from this work emphasizes the pivotal roles of market competitiveness and corporate governance in shaping investment efficiency. Regulators must closely monitor monopolistic behaviors to safeguard stakeholder interests, enhance investment efficiency and foster value creation. Recognizing the positive impact of market competition, firms should prioritize initiatives to promote industrial openness and intensify competition while strengthening market mechanisms. Policymakers should consider implementing competition-centric governance policies, such as deregulation and antitrust laws, to stimulate market competition. These measures can mitigate governance-related costs and promote a competitive marketplace.Originality/valueThis study provides fresh evidence concerning the effects of product market competition on investment efficiency of Indian firms under new governance norms, an unexplored area in India as most of the existing work has primarily examined the association between competition and investment levels. To best of our knowledge, this is one of the earliest studies demonstrating the substitution effects of competitiveness and governance systems on lowering investment inefficiency suggesting a significant influence of corporate governance in non-competitive industries. Finally, this study contributes to the field of methodology by developing a new firm-specific governance index based on 65 governance indicators.

Establishing the Effect of Democratic Governance on the Performance of Public Hospitals in Selected Counties in Kenya

Background The study critically evaluates the effect of democratic governance on the performance of public hospitals in Kenyan counties, following the 2010 Constitution that introduced devolved governance. This shift aimed to enhance local decision-making, accountability, and service delivery, specifically in the health sector, by empowering county governments. Democratic governance principles, such as transparency, accountability, and citizen participation are critical for addressing long-standing challenges like inequitable resource distribution, underfunding, and inefficiencies in public health services. This study explored the effect of democratic governance on the performance of public health hospitals in Kenya.  Methodology A mixed-methods approach was employed combining quantitative data from surveys with qualitative insights from interviews with county officials. Factor analysis was used to assess the relationship between democratic governance indicators - transparency, accountability, citizen participation, and public health service performance. Qualitative data, were gathered through interviews and content analysis of responses from county officials complemented the quantitative findings.  Results The study revealed that while democratic governance positively influences the performance of public hospitals in delivering health services in Kenyan counties, there are discrepancies in implementation across counties. Most respondents agreed that public participation and transparency in decision-making are strong, but the accessibility of financial records and county documents remains limited. Factor analysis confirmed that democratic governance significantly impacts health service outcomes, but qualitative findings indicated moderate transparency in financial matters, with only 8.3% of respondents rating transparency as high.  Recommendations To improve the performance of public hospitals in the delivery of health services, county governments should enhance the accessibility of public records, strengthen financial reporting and transparency, and foster deeper citizen engagement in governance. Improved oversight mechanisms and better governance practices are essential for leveraging the benefits of devolved governance.

Regulatory impact of informality on gasoline consumption efficiency in Africa: A proposed two-part complementary hypothesis test

This study provides new evidence for the regulatory impact of informality on gasoline efficiency in Africa. I propose a Two-Part Complementary Hypothesis (hereafter referred to as the TPCH test), advocating a differential approach to promoting gasoline efficiency: (1) an inverted U-shaped relationship between informality and gasoline inefficiency, and (2) a U-shaped relationship between government regulation and informality, with a significant level effect. The findings indicate an inverted U-shaped effect of informality on gasoline efficiency and a level-negative effect of regulation on informality. These results suggest a differential strategy for enhancing gasoline efficiency. Government regulation is more effective in economies at the pre-saturation stage (characterized by normal growth levels of informality) but proves ineffective in economies at the post-saturation stage (characterized by abnormal growth levels of informality), where energy-saving behaviors may be self-motivated. This is corroborated by the inefficiency equation, where indicators of good governance, such as the rule of law, control of corruption, and regulatory quality, are statistically significant in advancing energy efficiency goals. Gasoline efficiency performance varies across countries, with the higher performers also being the continent's most economically advanced. However, these estimates risk downward bias if outliers or unobserved/observed heterogeneity are not considered.

Governance effects on resource rent management and resource pollution

The issue of the resource curse has become critical for resource-rich countries in recent decades. This study empirically examines the impact of governance quality on the resource curse in 20 major resource-rich nations from 2004 to 2019. Using World Bank governance indicators, it assesses the effects of voice and accountability, government effectiveness, and control of corruption on a composite resource curse index, which includes resource rent and pollution. CS-ARDL results show that improvements in governance indicators reduce the resource curse in both the short and long term, with the largest impact seen from control of corruption. These findings highlight the crucial role of governance in addressing the resource curse.

Health outcome convergence and the roles of public health financing and governance in Africa.

Progress in health outcomes across Africa has been uneven, marked by significant disparities among countries, which not only challenges the global health security but impede progress towards achieving the United Nations' Sustainable Development Goals 3 and 10 (SDG 3 and SDG 10) and Universal Health Coverage (UHC). This paper examines the progress of African countries in reducing intra-country health outcome disparities between 2000 and 2019. In other words, the paper investigates the convergence hypothesis in health outcome using a panel data from 40 African countries. Data were sourced from the World Development Indicators, the World Governance Indicators, and the World Health Organization database. Employing a non-linear dynamic factor model, the study focused on three health outcomes: infant mortality rate, under-5 mortality rate, and life expectancy at birth. The findings indicate that while the hypothesis of convergence is not supported for the selected countries, evidence of convergence clubs is observed for the three health outcome variables. The paper further examine the factors contributing to club formation by using the marginal effects of the ordered logit regression model. The findings indicate that the overall impact of the control variables aligns with existing research. Moreover, governance quality and domestic government health expenditure emerge as significant determinants influencing the probability of membership in specific clubs for the child mortality rate models. In the life expectancy model, governance quality significantly drives club formation. The results suggest that there is a need for common health policies for the different convergence clubs, while country-specific policies should be implemented for the divergent countries. For instance, policies and strategies promoting health prioritization in national budget allocation and reallocation should be encouraged within each final club. Efforts to promote good governance policies by emphasizing anti-corruption measures and government effectiveness should also be encouraged. Moreover, there is a need to implement regional monitoring mechanisms to ensure progress in meeting health commitments, while prioritizing urbanization plans in countries with poorer health outcomes to enhance sanitation access.

The moderation effect of institutional quality on the nexus between migrant remittance and financial inclusion in West Africa

BACKGROUND: Migrants' remittances are critical in financing the economies of Africa and the West African region, in addition to FDI and ODA. It is also a significant driver of financial inclusion. OBJECTIVE: This paper assessed the moderating role of institutional quality on migrants' remittances and financial inclusion in West Africa during 2004–2023. METHODS: Secondary data was used for this study, sourced from the World Bank’s World Development Indicators (WDI), the World Governance Indicator (WGI), and the IMF’s Financial Access Survey (FAS), 2023. This study employed the Panel Fixed Effects (PFE) estimation technique, which accounts for Driscoll and Kraay's (1998) standard error. To ensure the robustness of the findings, the analysis was augmented with the utilisation of feasible generalised least squares (FGLS). RESULTS: There was an overall positive impact of institutional quality on financial inclusion (FI), at a significant rate of 120.8%, accounting for deposit-taking microfinance institutions, thereby highlighting that institutions play a crucial part in improving financial inclusion in West Africa. Also, the moderating effect of institutional quality had a more positive impact on microfinance institutions than commercial banks, at a significant rate of 16.2%. CONCLUSION: In summary, attention should be given to establishing more microfinance institutions as they serve as a better remittance distribution channel when compared to commercial banks, emphasising enhancing quality in financial services delivery. This also encourages more people to be financially included, thereby making better economic use of the remittance received in West Africa.