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The financial inclusion–economic growth nexus: what is new now?

Author

Listed:
  • Clifford Odame
  • Kingsley Opoku Appiah
  • Prince Gyimah

Abstract

Purpose - This paper examines the nexus between financial inclusion and the economic growth of an emerging market. Design/methodology/approach - We use dataset from the World Bank and Heritage Foundations over the period 2005–2016 and fully modified least squares (FMOLS) and dynamic OLS (DOLS) to examine the financial inclusion–economic growth nexus in Ghana. Findings - We document a negative relationship between financial inclusion and economic growth, and the causal nexus is unidirectional from financial access to GDP. Financial penetration, however, causes GDP growth, and GDP growth also causes financial penetration. We also document that IT infrastructure, the depth of financial services, employment and inflation drive economic growth in an emerging market. Practical implications - The findings support international calls to prioritize financial penetration policies geared toward greater economic growth. Originality/value - The paper adds to extant literature by highlighting new empirical insights on the financial inclusion–economic growth nexus from a sub-Saharan Africa market perspective.

Suggested Citation

  • Clifford Odame & Kingsley Opoku Appiah & Prince Gyimah, 2024. "The financial inclusion–economic growth nexus: what is new now?," Journal of Money and Business, Emerald Group Publishing Limited, vol. 4(2), pages 121-137, August.
    • Handle: RePEc:eme:jmbpps:jmb-05-2023-0026
    DOI: 10.1108/JMB-05-2023-0026
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