Does institutional quality matter for financial inclusion? International evidence

Duc Hong Vo

PLOS ONE, 2024, vol. 19, issue 2, 1-15

Abstract: Financial inclusion is pivotal in supporting sustainable economic growth and social transformation. It is a key enabler for reducing poverty and uplifting prosperity. Improving financial inclusion has attracted significant attention from practitioners, academics, and governments. However, the asymmetric effect of institutional quality on financial inclusion contingent upon the income level has largely been neglected in the existing literature. As such, this study examines this asymmetric effect using the panel smooth transition regression for a sample of 110 countries globally from 2004 to 2020. Our empirical findings confirm the asymmetric effect of institutional quality on financial inclusion depending on the income level. Improved institutional quality is associated with extended financial inclusion in high-income and middle-income countries. However, low-income countries may not benefit from their institutional reform. Policy implications have emerged based on these empirical findings.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0297431

DOI: 10.1371/journal.pone.0297431

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