Macroeconomic shocks, regulatory uncertainty, and the drive towards financial inclusiveness in emerging economies

Rexford Abaidoo () and Elvis Kwame Agyapong ()
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Rexford Abaidoo: University of Maryland Eastern Shore
Elvis Kwame Agyapong: Ghana Institute of Management and Public Administration, GIMPA Green Hill

International Economics and Economic Policy, 2025, vol. 22, issue 1, No 1, 22 pages

Abstract: Abstract This study evaluates the impact of macroeconomic shocks, financial market volatility, and regulatory and political risks on financial inclusion among developing economies. Data spanning the period from 2001 to 2020 were compiled from a sample of 39 Sub-Saharan Africa (SSA) economies for the analysis. Data analysis was performed using the panel-corrected standard error (PCSE) estimation technique by Beck and Katz (1995). The analysis suggests that macroeconomic risk, financial market volatility, and regulatory uncertainty constrain financial inclusion among reviewed economies. Further results suggest that effective governance or improved governance structures may not be enough to alleviate the adverse effects of macroeconomic risk, financial market volatility, and regulatory uncertainty on financial inclusion. The moderating impact of political instability on the nexus between macroeconomic risk and financial inclusion further highlights the inimical influence of both macroeconomic and political risks on financial inclusion. The various conclusions have significant implications for policymakers; they admonish the need for measures that ensure macroeconomic stability, promote financial market stability, and support unambiguous regulatory policies to foster financial inclusion.

Keywords: Macroeconomic risk; Regulatory uncertainty; Financial inclusion; Effective governance; Panel-corrected standard error model (search for similar items in EconPapers)
JEL-codes: C33 E3 E44 G2 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10368-024-00631-x

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