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Institutional quality’s influence on financial inclusion’ impact on bank stability

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  • Dao Ha
  • Yen Nguyen

Abstract

Using the Generalized Method of Moments (GMM), this study examines the influence of institutional quality on the impact of financial inclusion on the stability of 157 banks in 8 ASEAN countries from 2010 to 2020. The results show that financial inclusion negatively hurts bank stability, and this effect will be improved if it is implemented in an environment of good institutional quality. This is verified again in terms of institutional quality aspects. Corruption control, political stability, government efficiency, and the rule of law have positive effects, while regulatory quality has negative effects. The results are consistent across all three measures of bank stability, Zscore, standardized Zscore, and non-performing loans (NPL). With the above results, the study recommends that national governments take steps to improve institutional quality to increase the stability of banks in promoting financial inclusion.

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  • Dao Ha & Yen Nguyen, 2023. "Institutional quality’s influence on financial inclusion’ impact on bank stability," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(1), pages 2190212-219, December.
    • Handle: RePEc:taf:oaefxx:v:11:y:2023:i:1:p:2190212
    DOI: 10.1080/23322039.2023.2190212
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    Cited by:

    1. Owandjokuna Jovial Fundji, 2024. "The Impact of Financial Inclusion on Economic Growth based on East, West and Southern Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 14(5), pages 203-209, September.
    2. Mugabil Isayev, 2024. "Unraveling the interplay of financial inclusion, stability, and shadow banking in emerging markets," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-17, April.

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