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Macroeconomic shocks, regulatory uncertainty, and the drive towards financial inclusiveness in emerging economies

Author

Listed:
  • Rexford Abaidoo

    (University of Maryland Eastern Shore)

  • Elvis Kwame Agyapong

    (Ghana Institute of Management and Public Administration, GIMPA Green Hill)

Abstract

This study evaluates the impact of macroeconomic shocks, financial market volatility, and regulatory and political risks on financial inclusion among developing economies. Data spanning the period from 2001 to 2020 were compiled from a sample of 39 Sub-Saharan Africa (SSA) economies for the analysis. Data analysis was performed using the panel-corrected standard error (PCSE) estimation technique by Beck and Katz (1995). The analysis suggests that macroeconomic risk, financial market volatility, and regulatory uncertainty constrain financial inclusion among reviewed economies. Further results suggest that effective governance or improved governance structures may not be enough to alleviate the adverse effects of macroeconomic risk, financial market volatility, and regulatory uncertainty on financial inclusion. The moderating impact of political instability on the nexus between macroeconomic risk and financial inclusion further highlights the inimical influence of both macroeconomic and political risks on financial inclusion. The various conclusions have significant implications for policymakers; they admonish the need for measures that ensure macroeconomic stability, promote financial market stability, and support unambiguous regulatory policies to foster financial inclusion.

Suggested Citation

  • Rexford Abaidoo & Elvis Kwame Agyapong, 2025. "Macroeconomic shocks, regulatory uncertainty, and the drive towards financial inclusiveness in emerging economies," International Economics and Economic Policy, Springer, vol. 22(1), pages 1-22, February.
    • Handle: RePEc:kap:iecepo:v:22:y:2025:i:1:d:10.1007_s10368-024-00631-x
    DOI: 10.1007/s10368-024-00631-x
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    More about this item

    Keywords

    Macroeconomic risk; Regulatory uncertainty; Financial inclusion; Effective governance; Panel-corrected standard error model;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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