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Financial inclusion and its impact on economic growth: Empirical evidence from sub-Saharan Africa

Author

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  • Chuka Ifediora
  • Kenechukwu Onochie Offor
  • Eze Festus Eze
  • Samuel Manyo Takon
  • Anthony Eboselume Ageme
  • Godwin Imo Ibe
  • Josaphat U. J. Onwumere

Abstract

This study examines the impact of financial inclusion on economic growth using panel data of 22 sub-Sahara African (SSA) countries during the period spanning from 2012 to 2018. The study employs the system Generalized Method of Moments (GMM). Using a composite index of financial inclusion as well as individual financial inclusion indicators, we discovered that the availability dimension of financial inclusion, penetration dimension of financial inclusion and composite financial inclusion (all indicators put together) significantly and positively impact economic growth while the usage dimension of financial inclusion improves economic growth but not significantly. Also, bank branches and ATMs have positive and significant impact on economic growth, deposit accounts and outstanding loans promote economic growth but not significantly while outstanding deposits adversely affects economic growth. In addition, findings for mobile money indicators from 2012 to 2018 revealed that mobile money agents weaken economic growth while mobile money accounts and mobile money transactions foster economic growth but not significantly. This implies that financial education policies which help Africans better understand the potential benefits of the usage of banking services should be pursued.

Suggested Citation

  • Chuka Ifediora & Kenechukwu Onochie Offor & Eze Festus Eze & Samuel Manyo Takon & Anthony Eboselume Ageme & Godwin Imo Ibe & Josaphat U. J. Onwumere, 2022. "Financial inclusion and its impact on economic growth: Empirical evidence from sub-Saharan Africa," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2060551-206, December.
    • Handle: RePEc:taf:oaefxx:v:10:y:2022:i:1:p:2060551
    DOI: 10.1080/23322039.2022.2060551
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    Citations

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    Cited by:

    1. Bhatta, Siddha Raj, 2024. "Nexus between Financial Inclusion, Financial Inequality, Economic Growth and Income Inequality," MPRA Paper 121795, University Library of Munich, Germany.
    2. Armand Fréjuis Akpa & Dado Fabrice Degbedji & Augustin Foster Chabossou, 2024. "Assessing the effect of financial inclusion on human capital in West Africa: an heterogeneous analysis based on income level," SN Business & Economics, Springer, vol. 4(1), pages 1-18, January.
    3. Nicholas Bamegne Nambie & Philomena Dadzie & Dorcas Oye Haywood-Dadzie, 2023. "Measuring the Effect of Income Inequality, Financial Inclusion, Investment, and Unemployment, on Economic Growth in Africa: A Moderating Role of Digital Financial Technology," International Journal of Economics and Financial Issues, Econjournals, vol. 13(4), pages 111-124, July.
    4. repec:aly:journl:202306 is not listed on IDEAS
    5. 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.
    6. Ming Zhong & Jingjing Yu & Syed Anees Haider Zaidi, 2024. "Investigating the Impact of Financial Inclusion on Energy Consumption: Does Corruption Matter?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 8797-8814, June.
    7. Fentaw Leykun, 2024. "Climate change and external debt vulnerability: the case of Sub-Saharan Africa," Journal of Innovation and Entrepreneurship, Springer, vol. 13(1), pages 1-27, December.
    8. Tugba GUZ & Gulden POYRAZ, 2023. "The Digital Financial Inclusion Index: A Cross-Country Comparison," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 10(1), pages 157-180, January.

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