The Effect of Competition in the Banking Industry and Economic Growth on Financial Inclusion (Case Study: ECO Member Countries)

Samira Teimory (), Kiomars Sohaili () and Shahram Fattahi ()
Additional contact information
Samira Teimory: PhD Candidate, Department of Economics, Faculty of Economics and Accounting, Razi University
Kiomars Sohaili: Professor, Department of Economics, Faculty of Economics and Accounting, Razi University
Shahram Fattahi: Associate Professor, Department of Economics, Faculty of Economics and Accounting, Razi University

Quarterly Journal of Applied Theories of Economics, 2025, vol. 11, issue 4, 231-258

Abstract: Financial inclusion, which refers to the access of individuals, firms, and businesses to quality and affordable financial products and services responsibly and sustainably, plays an important role in enhancing the living standards of low-income households, increasing opportunities for the growth and development of small and medium-sized enterprises, reducing poverty and inequality, and improving financial stability. Various factors, including competition in the banking industry and economic growth, influence financial inclusion. This article addresses the critical significance of accurate and scientific estimation of the impact of these factors on financial inclusion. The panel autoregressive distributed lag (ARDL-PMG) model is the econometric method employed, and the data utilized are associated with ECO member countries from 2004 to 2020. The results indicate that economic growth enhances the demand for financial services, resulting in the emergence of new financial institutions and markets to meet this increasing demand. Additionally, the results suggest that the heightened competition in the banking sector considerably enhances financial inclusion. The market power in the financial industry intends to restrict the supply of loans and raise interest rates, exacerbating the cost of financing for firms. As a result of increased competition, banks with lower profit margins are compelled to implement a customer-centric approach. Finally, the results suggest that enhancing competition in the banking industry and reducing market influence are critical strategies for enhancing financial inclusion in the country's banking system.

Keywords: raghabat dar sanat bankdari; rashod egtesadi; keshor cpehei ozv eko (search for similar items in EconPapers)
JEL-codes: E22 F21 K23 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ecoj.tabrizu.ac.ir/article_19526_ec0e44087d2f7d3afca7b94973f1f3a6.pdf Full text (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:qjatoe:0360

Access Statistics for this article

Quarterly Journal of Applied Theories of Economics is currently edited by Sakineh Sojoodi

More articles in Quarterly Journal of Applied Theories of Economics from Faculty of Economics, Management and Business, University of Tabriz Contact information at EDIRC.
Bibliographic data for series maintained by Sakineh Sojoodi ().