Financial Inclusion Institutional Quality and Economic Growth in Asia
DOI:
https://doi.org/10.55737/qjss.015683873Keywords:
Financial Inclusions, Institutional Quality, Economic Growth, GMMAbstract
This study intends to investigate the impact of Financial Inclusion, Institutional Quality on economic growth, using a sample of 23 countries from 2006-2017. The role of financial inclusion and institutional quality is subsequently estimated through static and dynamic panel models. A composite indicator of financial inclusion is constructed via principal component analysis (PCA). We document that financial inclusion and institutional quality are positively associated with economic growth. This piece of work provides a base for policy formulators to streamline their efforts towards reformative processes in financial sectors for promoting financial inclusiveness and taking necessary steps to regulate and strengthen the institutional quality in ensuring sustainable economic growth.
Downloads
References
Acemoğlu, D., & Robinson, J. A. (2010). The role of institutions in growth and development. Review of Economics and Institutions, 1(2), https://doi.org/10.5202/rei.v1i2.14
Aghion, P., & Bolton, P. (1997). A Theory of Trickle-Down Growth and Development. The Review of Economic Studies, 64(2), 151. https://doi.org/10.2307/2971707
Akerlof, G. A. (2002). Behavioral macroeconomics and macroeconomic behavior. American Economic Review, 92(3), 411-433. https://doi.org/10.1257/00028280260136192
Alam, M. R., Kiterage, E., & Bizuayehu, B. (2017). Government effectiveness and economic growth. Economic Bulletin, 37(1), 222-227. https://ssrn.com/abstract=3696166
Anarfo, E. B., Abor, J. Y., Osei, K. A., & Gyeke-Dako, A. (2019). Financial inclusion and financial sector development in sub-Saharan Africa: A panel VAR approach. International Journal of Managerial Finance, 15(4), 444-463. https://doi.org/10.1108/ijmf-07-2018-0205
Anwar, S., & Cooray, A. (2012). Financial development, political rights, civil liberties and economic growth: Evidence from South Asia. Economic Modelling, 29(3), 974-981. https://doi.org/10.1016/j.econmod.2012.02.009
Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29-51. https://doi.org/10.1016/0304-4076(94)01642-d
Arestis, P., & Demetriades, P. (1997). Financial development and economic growth: Assessing the evidence*. The Economic Journal, 107(442), 783-799. https://doi.org/10.1111/j.1468-0297.1997.tb00043.x
Atindéhou, R. B., Gueyie *, J. P., & Amenounve, E. K. (2005). Financial intermediation and economic growth: Evidence from Western Africa. Applied Financial Economics, 15(11), 777-790. https://doi.org/10.1080/09603100500108030
Azam, M., Liu, L., & Ahmad, N. (2020). Impact of institutional quality on environment and energy consumption: Evidence from developing world. Environment, Development and Sustainability, 23(2), 1646-1667. https://doi.org/10.1007/s10668-020-00644-x
Beck, T., Demirguc-Kunt, A., & Maksimovic, V. (2004). Bank competition and access to finance: International evidence. Journal of Money, Credit, and Banking, 36(3b), 627-648. https://doi.org/10.1353/mcb.2004.0039
Becker, M. C., & Knudsen, T. (2002). Schumpeter 1911: Farsighted visions on economic development. The American Journal of Economics and Sociology, 61(2), 387-403. https://doi.org/10.1111/1536-7150.00166
Bhattacharya, A., Chattopadhyay, A., Mazumdar, D., Chakravarty, A., & Pal, S. (2010). Antioxidant constituents and enzyme activities in chilli peppers. International Journal of Vegetable Science, 16(3), 201-211. https://doi.org/10.1080/19315260903529709
Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115-143. https://doi.org/10.1016/s0304-4076(98)00009-8
Cabeza-García, L., Del Brio, E. B., & Oscanoa-Victorio, M. L. (2019). Female financial inclusion and its impacts on inclusive economic development. Womens Studies International Forum, 77, 102300. https://doi.org/10.1016/j.wsif.2019.102300
Carbó, S., Gardener, E. P., & Molyneux, P. (2005). Financial exclusion in Europe. Financial Exclusion, 98-111. https://doi.org/10.1057/9780230508743_6
Chowdhurie-Aziz, M. (1997). Political openness and economic performance. unpublished paper, University of Minnesota.
Coase, R. H. (1988). The Nature of the Firm: Meaning. Journal of Law, Economics, & Organization, 4(1), 19–32. http://www.jstor.org/stable/765012
Dahiya, S., & Kumar, M. (2020). Linkage between financial inclusion and economic growth: An empirical study of the emerging Indian economy. Vision: The Journal of Business Perspective, 24(2), 184-193. https://doi.org/10.1177/0972262920923891
De Gregorio, J., & Guidotti, P. E. (1995). Financial development and economic growth. World Development, 23(3), 433-448. https://doi.org/10.1016/0305-750x(94)00132-i
Diamond, D. W., & Rajan, R. G. (2009). The credit crisis: Conjectures about causes and remedies. American Economic Review, 99(2), 606-610. https://doi.org/10.1257/aer.99.2.606
Dixit, R., & Ghosh, M. (2013). Financial inclusion for inclusive growth of India-A study of Indian states. International Journal of Business Management & Research, 3(1), 147-156.
Ganti, S., & Acharya, D. (2017). Financial inclusion fosters growth: Simple multiplier and "AK" Growth model analysis. Universal Journal of Accounting and Finance, 5(3), 55-59. https://doi.org/10.13189/ujaf.2017.050301
Ghosh, S., Gillis, A., Levkov, K., Vitkin, E., & Golberg, A. (2020). Saving energy on meat air convection drying with pulsed electric field coupled to mechanical press water removal. Innovative Food Science & Emerging Technologies, 66, 102509. https://doi.org/10.1016/j.ifset.2020.102509
Güney, T. (2016). Governance and sustainable development: How effective is governance? The Journal of International Trade & Economic Development, 26(3), 316-335. https://doi.org/10.1080/09638199.2016.1249391
Jeanneney, S. G., & Kpodar, K. (2011). Financial development and poverty reduction: Can there be a benefit without a cost? Journal of Development Studies, 47(1), 143-163. https://doi.org/10.1080/00220388.2010.506918
Jiang, C., & Ma, X. (2019). The impact of financial development on carbon emissions: A global perspective. Sustainability, 11(19), 5241. https://doi.org/10.3390/su11195241
Khan, A. H. (1994). Financial liberalisation and the demand for money in Pakistan. The Pakistan Development Review, 33(4II), 997-1010. https://doi.org/10.30541/v33i4iipp.997-1010
Khan, H., Khan, S., & Zhong, F. (2020). Institutional Quality and Financial Development: Evidence from Developing and Emerging Economies. Global Business Review, 23(4), 971–983. https://doi.org/10.1177/0972150919892366
Kim, D., Yu, J., & Hassan, M. K. (2018). Financial inclusion and economic growth in OIC countries. Research in International Business and Finance, 43, 1-14. https://doi.org/10.1016/j.ribaf.2017.07.178
Kim, J. (2015). A study on the effect of financial inclusion on the relationship between income inequality and economic growth. Emerging Markets Finance and Trade, 52(2), 498–512. https://doi.org/10.1080/1540496x.2016.1110467
Knack, S., & Keefer, P. (1995). Institutions and economic performance: Cross-country tests using alternative institutional measures. Economics & Politics, 7(3), 207-227. https://doi.org/10.1111/j.1468-0343.1995.tb00111.x
Kurtz, M. J., & Schrank, A. (2007). Growth and governance: Models, measures, and mechanisms. The Journal of Politics, 69(2), 538-554. https://doi.org/10.1111/j.1468-2508.2007.00549.x
La Porta, R., Lopez‐de‐Silanes, F., Shleifer, A., & Vishny, R. W. (1997). Legal determinants of external finance. The Journal of Finance, 52(3), 1131. https://doi.org/10.2307/2329518
Le, T., Chuc, A. T., & Taghizadeh-Hesary, F. (2019). Financial inclusion and its impact on financial efficiency and sustainability: Empirical evidence from Asia. Borsa Istanbul Review, 19(4), 310-322. https://doi.org/10.1016/j.bir.2019.07.002
Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3-42. https://doi.org/10.1016/0304-3932(88)90168-7
Luintel, K. B., & Khan, M. (1999). A quantitative reassessment of the finance–growth nexus: Evidence from a multivariate VAR. Journal of Development Economics, 60(2), 381-405. https://doi.org/10.1016/s0304-3878(99)00045-0
Morgan, P. J., & Pontines, V. (2018). Financial stability and financial inclusion: The case of sme lending. The Singapore Economic Review, 63(01), 111-124. https://doi.org/10.1142/s0217590818410035
Nedić, V., Despotović, D., Cvetanović, S., Djukić, T., & Petrović, D. (2020). Institutional reforms for economic growth in the western Balkan countries. Journal of Policy Modeling, 42(5), 933-952. https://doi.org/10.1016/j.jpolmod.2020.04.002
Nguyen, T., Locke, S., & Reddy, K. (2014). A dynamic estimation of governance structures and financial performance for Singaporean companies. Economic Modelling, 40, 1-11. https://doi.org/10.1016/j.econmod.2014.03.013
Nizam, R., Karim, Z. A., Rahman, A. A., & Sarmidi, T. (2020). Financial inclusiveness and economic growth: New evidence using a threshold regression analysis. Economic Research-Ekonomska Istraživanja, 33(1), 1465-1484. https://doi.org/10.1080/1331677x.2020.1748508
North, D. C. (1990a). Institutions, institutional change and economic performance: Cambridge university press.
North, D. C. (1990). A transaction cost theory of politics. Journal of Theoretical Politics, 2(4), 355-367. https://doi.org/10.1177/0951692890002004001
Omri, A., & Ben Mabrouk, N. (2020). Good governance for sustainable development goals: Getting ahead of the pack or falling behind? Environmental Impact Assessment Review, 83, 106388. https://doi.org/10.1016/j.eiar.2020.106388
Panayotou, T. (1997). Demystifying the environmental Kuznets curve: Turning a black box into a policy tool. Environment and Development Economics, 2(4), 465-484. https://doi.org/10.1017/s1355770x97000259
Prasad, E., Rajan, R., & Subramanian, A. (2007). Foreign capital and economic growth. https://doi.org/10.3386/w13619
Przeworski, A., & Limongi, F. (1993). Political regimes and economic growth. Journal of Economic Perspectives, 7(3), 51-69. https://doi.org/10.1257/jep.7.3.51
Rahman, M. M., Saidi, K., & Mbarek, M. B. (2020). Economic growth in South Asia: The role of CO2 emissions, population density and trade openness. Heliyon, 6(5), e03903. https://doi.org/10.1016/j.heliyon.2020.e03903
Rana, S. S. (2017). Prevertebral tubercular abscess diagnosed by endoscopic ultrasound-guided fine needle aspiration. Tropical Gastroenterology, 38(3). https://doi.org/10.7869/tg.435
Raza, S. A., Shah, N., & Arif, I. (2019). Relationship between FDI and economic growth in the presence of good governance system: Evidence from OECD countries. Global Business Review, 22(6), 1471-1489. https://doi.org/10.1177/0972150919833484
Renzhi, N., & Baek, Y. J. (2020). Can financial inclusion be an effective mitigation measure? evidence from panel data analysis of the environmental Kuznets curve. Finance Research Letters, 37, 101725.
Salman, M., Long, X., Dauda, L., & Mensah, C. N. (2019). The impact of institutional quality on economic growth and carbon emissions: Evidence from Indonesia, South Korea and Thailand. Journal of Cleaner Production, 241, 118331. https://doi.org/10.1016/j.jclepro.2019.118331
Salvatore, A. (2009). 7. The reform project in the emerging public spheres. Islam and Modernity, 185-205. https://doi.org/10.1515/9780748637942-008
Sarma, M. (2008). Index of financial inclusion, Indian council for research on international economic relations (ICRIER).
Sarma, M. (2012). Index of Financial Inclusion–A measure of financial sector inclusiveness.
Sarma, M., & Pais, J. (2010). Financial inclusion and development. Journal of International Development, 23(5), 613-628. https://doi.org/10.1002/jid.1698
Sethi, D., & Acharya, D. (2018). Financial inclusion and economic growth linkage: Some cross country evidence. Journal of Financial Economic Policy, 10(3), 369-385. https://doi.org/10.1108/jfep-11-2016-0073
Sharma, D. (2016). Nexus between financial inclusion and economic growth. Journal of Financial Economic Policy, 8(1), 13-36. https://doi.org/10.1108/jfep-01-2015-0004
Sharma, R. R. (2020). Financial inclusion and economic growth: Evidence-based research: SAGE Publications Sage India: New Delhi, India.
Tavares, J., & Wacziarg, R. (2001). How democracy affects growth. European Economic Review, 45(8), 1341-1378. https://doi.org/10.1016/s0014-2921(00)00093-3
Tun, Y., Azman-Saini, W., & Law, S. (2012). International evidence on the link between foreign direct investment and institutional quality. Engineering Economics, 23(4), 379-386. https://doi.org/10.5755/j01.ee.23.4.2569
VO, A. T., VAN, L. T., VO, D. H., & MCALEER, M. (2019). Financial inclusion and macroeconomic stability in emerging and frontier markets. Annals of Financial Economics, 14(02), 1950008. https://doi.org/10.1142/s2010495219500088
Wang, X., & Guan, J. (2016). Financial inclusion: Measurement, spatial effects and influencing factors. Applied Economics, 49(18), 1751-1762. https://doi.org/10.1080/00036846.2016.1226488
Williamson, O. E. (1989). Transaction Cost Economics. Handbook of Industrial Organization, 135-182. https://doi.org/10.1016/s1573-448x(89)01006-x
Downloads
Published
Issue
Section
License
Copyright (c) 2023 Shoib Hassan, Hina Affandi, Khurram Jawad:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
