Financial inclusion, financial stability and economic growth in developing countries

The number of individuals and firms that have access and uses formal financial services provided by the mainstream financial sectors determines the performance of the financial sector of the economy; higher level of financial inclusion could automatically increase banking liquidity and hence provide...

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Main Author:	Ali, Hamisu Sadi
Format:	Thesis
Language:	English
Published:	2016
Subjects:	Finance - Developing countries Economics - Developing countries Financial services industry
Online Access:	http://psasir.upm.edu.my/id/eprint/69303/1/FEP%202016%204%20IR.pdf
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id	my-upm-ir.69303
record_format	uketd_dc
spelling	my-upm-ir.693032019-06-25T03:28:01Z Financial inclusion, financial stability and economic growth in developing countries 2016-05 Ali, Hamisu Sadi The number of individuals and firms that have access and uses formal financial services provided by the mainstream financial sectors determines the performance of the financial sector of the economy; higher level of financial inclusion could automatically increase banking liquidity and hence provides more loanable funds for viable investments, the multiplier effect of this may positively influence the level of employment and reduce income inequality as well poverty. The present study has the overall objective of investigating the impacts of financial inclusion in sustaining financial stability and economic growth in developing countries.The first specific objective intends to examine the effect of migrant workers‟ remittance on financial inclusion in developing countries based on dynamic panel GMM estimation technique. In this objective 46 developing countries were selected and the time period of the study is 2004-2010. The empirical finding reveals that migrant workers remittances have positive and significant impact on financial inclusion in the sample countries.The result reveals that 1% increase in migrant workers remittance could increase financial inclusion by 0.067% in the sample countries. Migrant workers remittance therefore becomes an important financial inflow that stimulates financial sector development in the countries investigated.The second specific objective based on 52 developing countries for the time period of 2004-2010 also applied dynamic panel GMM estimation technique, the objective is to examine the effect of financial inclusion on financial stability in developing countries.The main empirical finding shows that financial inclusion positively influences financial stability, the result suggest that 1% increase in financial inclusion positively stimulates financial stability by 0.375%. This therefore emphasizes the relevance of higher access and usage of formal financial services in controlling the shocks of financial instability, hence financial inclusion stimulates the stability of the financial system.The third specific objective also applied dynamic panel GMM estimation technique across 48 developing countries for the period of 2004-2010; the objective is to investigate the impact of financial inclusion on economic growth in developing countries. The key impirical finding reveals that financial inclusion have positive and significant impact on economic growth in developing countries. The result highlight that 1% increase in financial inclusion could stimulates economic growth to increase by 0.132%, this finding confirmed the essential functions that access and usage of formal financial services plays in promoting the overall economic performance in developing countries. Therefore it is imperative from the policy perspectives to encourage uses as well as provide enabling policies and suitable environments for smooth accessibility of formal financial services considering its diverse positive effects on financial sector development as well as overall economic growth. Finance - Developing countries Economics - Developing countries Financial services industry 2016-05 Thesis http://psasir.upm.edu.my/id/eprint/69303/ http://psasir.upm.edu.my/id/eprint/69303/1/FEP%202016%204%20IR.pdf text en public doctoral Universiti Putra Malaysia Finance - Developing countries Economics - Developing countries Financial services industry
institution	Universiti Putra Malaysia
collection	PSAS Institutional Repository
language	English
topic	Finance - Developing countries Economics - Developing countries Financial services industry
spellingShingle	Finance - Developing countries Economics - Developing countries Financial services industry Ali, Hamisu Sadi Financial inclusion, financial stability and economic growth in developing countries
description	The number of individuals and firms that have access and uses formal financial services provided by the mainstream financial sectors determines the performance of the financial sector of the economy; higher level of financial inclusion could automatically increase banking liquidity and hence provides more loanable funds for viable investments, the multiplier effect of this may positively influence the level of employment and reduce income inequality as well poverty. The present study has the overall objective of investigating the impacts of financial inclusion in sustaining financial stability and economic growth in developing countries.The first specific objective intends to examine the effect of migrant workers‟ remittance on financial inclusion in developing countries based on dynamic panel GMM estimation technique. In this objective 46 developing countries were selected and the time period of the study is 2004-2010. The empirical finding reveals that migrant workers remittances have positive and significant impact on financial inclusion in the sample countries.The result reveals that 1% increase in migrant workers remittance could increase financial inclusion by 0.067% in the sample countries. Migrant workers remittance therefore becomes an important financial inflow that stimulates financial sector development in the countries investigated.The second specific objective based on 52 developing countries for the time period of 2004-2010 also applied dynamic panel GMM estimation technique, the objective is to examine the effect of financial inclusion on financial stability in developing countries.The main empirical finding shows that financial inclusion positively influences financial stability, the result suggest that 1% increase in financial inclusion positively stimulates financial stability by 0.375%. This therefore emphasizes the relevance of higher access and usage of formal financial services in controlling the shocks of financial instability, hence financial inclusion stimulates the stability of the financial system.The third specific objective also applied dynamic panel GMM estimation technique across 48 developing countries for the period of 2004-2010; the objective is to investigate the impact of financial inclusion on economic growth in developing countries. The key impirical finding reveals that financial inclusion have positive and significant impact on economic growth in developing countries. The result highlight that 1% increase in financial inclusion could stimulates economic growth to increase by 0.132%, this finding confirmed the essential functions that access and usage of formal financial services plays in promoting the overall economic performance in developing countries. Therefore it is imperative from the policy perspectives to encourage uses as well as provide enabling policies and suitable environments for smooth accessibility of formal financial services considering its diverse positive effects on financial sector development as well as overall economic growth.
format	Thesis
qualification_level	Doctorate
author	Ali, Hamisu Sadi
author_facet	Ali, Hamisu Sadi
author_sort	Ali, Hamisu Sadi
title	Financial inclusion, financial stability and economic growth in developing countries
title_short	Financial inclusion, financial stability and economic growth in developing countries
title_full	Financial inclusion, financial stability and economic growth in developing countries
title_fullStr	Financial inclusion, financial stability and economic growth in developing countries
title_full_unstemmed	Financial inclusion, financial stability and economic growth in developing countries
title_sort	financial inclusion, financial stability and economic growth in developing countries
granting_institution	Universiti Putra Malaysia
publishDate	2016
url	http://psasir.upm.edu.my/id/eprint/69303/1/FEP%202016%204%20IR.pdf
_version_	1747812682040344576

Financial inclusion, financial stability and economic growth in developing countries

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