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Effects of Financial Inclusion on Economic Growth, Poverty, Sustainability, and Financial Efficiency: Evidence from the G20 Countries

Author

Listed:
  • Nasir Khan

    (IBMS, The University of Agriculture Peshawar, Peshawar 25130, Pakistan)

  • Mahwish Zafar

    (Faculty of Business and Management Science, Superior University Lahore, Lahore 54000, Pakistan)

  • Abiodun Funso Okunlola

    (Department of Business Management, University of South Africa, Pretoria 0002, South Africa)

  • Zeman Zoltan

    (Research Center, Hungarian National Bank, John von Neumann University, Izsáki út 10, 6000 Kecskemét, Hungary)

  • Magda Robert

    (Research Center, Hungarian National Bank, John von Neumann University, Izsáki út 10, 6000 Kecskemét, Hungary
    Vanderbijlpark Campus, North-West University, Vanderbijlpark 1900, South Africa)

Abstract

The main purpose of this study is to scrutinize the effect of financial inclusion on financial sustainability, financial efficiency, gross domestic product, and human development in the context of G20 nations. This study has employed annual data of 15 developed and emerging economies during the period from 2004 to 2017. The current study has utilized a single index for financial inclusion, financial sustainability, and financial efficiency by employing principal composite analysis (PCA). The outcomes of the panel stationarity test confirmed the ARDL model for both the long and short runs. Equally, the findings of the ARDL Model 1 showed no association between financial inclusion and financial sustainability in the short run, however, in the long run, inclusive finance showed a significant impact on sustainability. Likewise, the ARDL Model 2 showed that financial inclusion has no effect on efficiency in the short run, while it positively influenced financial efficiency in the long run. The results of the ARDL Model 3 are also similar to Models 1 and 2 where inclusive finance showed no effect on poverty in the short run, but a significant effect in long run. Similarly, the ARDL Model 4 also presented no association between GDP and inclusive finance in the short run, while it showed significant relationships in the long run. Moreover, the outcomes of the GMM Model 1 showed a significant impact of inclusive finance on financial stability, and these results were similar to the GMM Model 2 between financial inclusion and financial efficiency. Additionally, GMM Models 3 and 4 have shown that inclusive finance has a statistically significant impact on poverty and economic expansion, respectively. The outcomes of this article are essential for policymakers, academics, regulators, and practitioners with valuable and convincing debate over financial inclusion, economic growth, poverty, sustainability, and financial efficiency.

Suggested Citation

  • Nasir Khan & Mahwish Zafar & Abiodun Funso Okunlola & Zeman Zoltan & Magda Robert, 2022. "Effects of Financial Inclusion on Economic Growth, Poverty, Sustainability, and Financial Efficiency: Evidence from the G20 Countries," Sustainability, MDPI, vol. 14(19), pages 1-19, October.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:19:p:12688-:d:934401
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    2. Aamir Aijaz Syed, 2024. "The moderating role of governance, banking regulation, and supervision on shadow economy, financial inclusion, and financial stability nexus: a case of G5 economies," Economic Change and Restructuring, Springer, vol. 57(6), pages 1-31, December.
    3. Wafa Khémiri & Eman Fathi Attia & Ahmed Chafai, 2024. "How Financial Inclusion Moderates the Curvilinear Nexus between Tangible Investment and Sustainable Firm Growth: New Evidence from the Middle East and North Africa Region," Sustainability, MDPI, vol. 16(6), pages 1-27, March.
    4. Qianqian Li & Qilin Liu, 2023. "Impact of Digital Financial Inclusion on Residents’ Income and Income Structure," Sustainability, MDPI, vol. 15(3), pages 1-20, January.
    5. Mingzhao Xiong & Wenqi Li & Brian Sheng Xian Teo & Jaizah Othman, 2022. "Can China’s Digital Inclusive Finance Alleviate Rural Poverty? An Empirical Analysis from the Perspective of Regional Economic Development and an Income Gap," Sustainability, MDPI, vol. 14(24), pages 1-18, December.
    6. Mohamed Hossameldin Khalifa & Hassan El-Sady & Vasilya Sultanova, 2023. "Does Financial Inclusion Enhance Economic Output? Evidence from North Africa," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 12, March.
    7. Roman Plokhikh & Dana Shokparova & Gyula Fodor & Sándor Berghauer & Attila Tóth & Uzakbay Suymukhanov & Aiman Zhakupova & Imre Varga & Kai Zhu & Lóránt Dénes Dávid, 2023. "Towards Sustainable Pasture Agrolandscapes: A Landscape-Ecological-Indicative Approach to Environmental Audits and Impact Assessments," Sustainability, MDPI, vol. 15(8), pages 1-15, April.
    8. Eberechi Bernadine Ikwuagwu & Kingsley Onyekachi Onyele, "undated". "Dynamics of financial inclusion and capital formation in Nigeria," Review of Socio - Economic Perspectives 202306, Reviewsep.

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    More about this item

    Keywords

    financial Inclusion; sustainability; financial efficiency; economic growth; poverty; ARDL; fixed and random effect; GMM; G20 nations;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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