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The linkage between globalisation and financial inclusion: Do inequality and institutions matter?

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  • Malik Cahyadin

Abstract

This paper examines the effect of the globalization threshold on financial inclusion in 40 selected countries during 2000-2018. A principal component analysis (PCA) and a static panel threshold (SPT) are utilized. There are three dimensions and one aggregation of financial inclusion indicators assessed by PCA, while the globalization threshold is estimated under static panel threshold regression. Findings/Originality: The findings exhibit six countries with strong financial inclusion and eight countries with weak financial inclusion during study periods. Furthermore, the threshold effect of globalization has a significant impact on the financial inclusion index. The robustness checking employs panel cointegration test exhibits that inequality and some institutions indicators have a significant impact on financial inclusion both in the short-run and long-run. The policy implication suggests that governments should increase the financial inclusion index level during the globalization period, decrease inequality, and improve institutions' quality.

Suggested Citation

  • Malik Cahyadin, 2020. "The linkage between globalisation and financial inclusion: Do inequality and institutions matter?," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 12(2), pages 220-233.
    • Handle: RePEc:uii:journl:v:12:y:2020:i:2:p:220-233:id:16432
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    File URL: https://journal.uii.ac.id/JEP/article/view/16432/10600
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    Cited by:

    1. Zhian Zhiow Augustinne Wong & Ramez Abubakr Badeeb & Abey P. Philip, 2023. "Financial Inclusion, Poverty, and Income Inequality in ASEAN Countries: Does Financial Innovation Matter?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 169(1), pages 471-503, September.
    2. Adella Siti Nursaliyawati & Siskarossa Ika Oktora, 2022. "Simultaneous Relationship between Financial Inclusion, Economic Growth, and Income Inequality in Sulawesi Island, 2011–2019," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 68, pages 132-148, Desember.

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