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Financial Inclusion and Economic Growth : Evidence in the Digital Environment of Developing Countries

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  • Tarna Silue

    (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

Abstract

The paper focuses on the relationship between economic growth and financial inclusion in developing countries. One of the main innovations of the analysis is to report on the contribution to developing new digital financial services such as mobile money. To do this, I first realize a simple endogenous growth model in which the role of the financial sector is to provide sources of investment to included population. The model indicates that consumption could be the main channel through financial inclusion, contributing to growth. Then, the empirical estimation realized using the Generalized Method of Moments (GMM) with 57 countries over 2007-2017 evaluates the impacts of traditional and digital inclusion on growth. The results confirm the positive effect of financial inclusion on growth. For formal inclusion, estimators reveal that the financial system deposits contribute to growth in developing countries. Concerning digital inclusion, we note that an active mobile money account has a higher positive impact on growth than standard inclusion.

Suggested Citation

  • Tarna Silue, 2021. "Financial Inclusion and Economic Growth : Evidence in the Digital Environment of Developing Countries," CERDI Working papers hal-03281843, HAL.
    • Handle: RePEc:hal:cdiwps:hal-03281843
    Note: View the original document on HAL open archive server: https://uca.hal.science/hal-03281843
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    Keywords

    Endogenous growth; Financial inclusion; Mobile money; GMM System;
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