Economics at your fingertips  

Financial inclusion and gross capital formation: A sectoral analysis approach for the MENA region and EMs

Freddy A. Rojas Cama and Noha Emara

International Review of Financial Analysis, 2022, vol. 79, issue C

Abstract: Most Middle East and North Africa (MENA) governments have firmly committed to financial inclusion as part of a progressive agenda. In this, their objective is to improve the allocation of resources across small and medium firms. Indeed, empirical literature has quantitatively shown that financial inclusion improves nations' aggregate measures of economic success such as growth or inequality. But we know very little of its effects on sectoral variates. This paper contributes to the literature by estimating and comparing the effects of financial inclusion on the relative size of gross capital formation of low-tech sectors in the MENA region. We use a panel of 3-digit level sectoral data on approximately 34 manufacturing industries of the United Nations Industrial Development Organization (UNIDO) for eleven MENA countries and twelve emerging markets (EMs) within the period 2005–2016. The paper focuses in four measures of financial inclusion commonly used in the literature of development: size of commercial bank branches, ATMs, borrowers, and depositors. The results suggest that financial inclusion in MENA has a positive, statistically significant effect on the size of gross capital formation in the low R&D-intensity industries. Thus, policy considerations can be directed towards expanding financial services to other low-tech industries including fabricated metal products and to the medium tech division including repair and installation of machinery and equipment industries. This policy will have greater impact on gross capital formation and, thereby, economic growth.

Keywords: MENA; Gross capital formation; Financial inclusion; R&D intensity sectors (search for similar items in EconPapers)
JEL-codes: O11 O14 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

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:

DOI: 10.1016/j.irfa.2021.101993

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2023-09-10
Handle: RePEc:eee:finana:v:79:y:2022:i:c:s1057521921003094