Determinants of Financial Inclusion: Evidence from the MENA Region

Rachida El Yamani

Chapter 15 in Handbook of Banking and Finance in the MENA Region, 2024, pp 381-403 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The financial crisis, the accumulation of sovereign debt, shocks to commodity prices, and pandemics are just a few of the recent economic crises that have affected the world and had a major effect on economic activities. In this context, the financial sector must fully contribute to encouraging economic growth in order to achieve equitable economic growth and reduce poverty. To that end, access to affordable and secure financial services is crucial. The main goal of financial inclusion, which allows people to take advantage of saving and investing opportunities, is to provide basic financial services to society’s poor and excluded groups. This study aims to identify the factors that promote financial inclusion in the MENA region. It specifically examines the impact of GDP per capita, the money supply as a percentage of GDP, the number of internet users as a percentage of the population, and consumer price inflation. The International Monetary Fund and the Global Development Indicators provided the secondary data for the study, which covers the period 2004–2020. The dynamic panel was conducted using Stata 17 software to obtain the coefficients of such variables that affect the levels of financial inclusion in six MENA countries. The results reveal that income level, measured by GDP per capita, financial sector development, measured by the money supply, and the number of internet users all have positive effects on financial inclusion in the MENA region, while consumer price inflation has no impact. The Financial Inclusion Index (FII), according to Sarma’s (2008) approach, has not been employed in any relevant studies, despite the theoretical and empirical literature offering a range of perspectives on which factor can determine financial inclusion. This study uses this index to measure financial inclusion and then applies dynamic panel estimation to identify the factors that promote financial inclusion in MENA countries. Consequently, this chapter strives to enrich the literature by comprehending the determinants of financial inclusion in the MENA region, covering the period 2004–2020.

Keywords: MENA; Banking Sector; Business Risk; Corporate Governance; COVID-19; Cryptocurrency; Fintech; Financial Stability; Green Finance (search for similar items in EconPapers)
JEL-codes: F3 G2 G3 (search for similar items in EconPapers)
Date: 2024
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