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Nexus between Financial Inclusion, Financial Inequality, Economic Growth and Income Inequality

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  • Bhatta, Siddha Raj

Abstract

This article attempts to analyze the nexus between financial inclusion, inequality in the distribution of financial services, economic growth and inequality by using a sample of 112 countries. It estimates financial inclusion index for the countries using a number of access and usage indicators and then investigates the linkages of such index with growth, financial inequality, and income inequality. Results show that even though Nepal has progressed a lot in expanding financial inclusion, it ranks 70 out of the 112 countries included in the study in a cross-country context implying that more need to be done in the future to come in the forefront. In addition, results from the growth and inequality regression demonstrate that in the presence of higher inequality in the distribution of financial services, the gains from financial inclusion might not be realized as expected. This calls for the attention of the policymakers to address the inequality in financial services so that financial inclusion can contribute to higher and equitable growth.

Suggested Citation

  • Bhatta, Siddha Raj, 2024. "Nexus between Financial Inclusion, Financial Inequality, Economic Growth and Income Inequality," MPRA Paper 121795, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:121795
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    More about this item

    Keywords

    Financial inclusion; Growth; Inequality;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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