A Confidence-Financial Inclusion Nexus in the Caucasus and Central Asia?

Kalin Tintchev and Kady Keita

No 2024/257, IMF Working Papers from International Monetary Fund

Abstract: We document novel evidence that confidence in macrofinancial stability has a positive impact on financial inclusion in CCA countries and more broadly. This channel is particularly important for CCA countries, with confidence gains of 1 unit leading to 0.7 unit improvement in financial inclusion. Institutional factors such as level of governance and reliance on transparent policy rules and robust financial safety nets explain a large fraction of the variability in confidence in the region. We find that governance reforms are critical for deepening financial inclusion while the impact of inflation targeting, fiscal rules and deposit insurance schemes is positive and material only when governance levels exceed certain thresholds.

Keywords: Financial inclusion; confidence; governance; inflation targeting; fiscal rules; deposit insurance; inclusion Nexus; governance reform; CCA country; governance level; governance gap; Fiscal rules; Financial sector development; Global; Central Asia and the Caucasus (search for similar items in EconPapers)
Pages: 26
Date: 2024-12-20
New Economics Papers: this item is included in nep-fdg, nep-fle and nep-pay
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