EconPapers    
Economics at your fingertips  
 

Financial Inclusion, Governance, and Institutions: Evidence from Developing Economies

Muhamed Zulkhibri () and Reza Ghazal
Additional contact information
Muhamed Zulkhibri: The Islamic Research and Teaching Institute (IRTI)
Reza Ghazal: University of Kurdistan-Hawler (UKH), Hawler (Erbil), Iraq

Authors registered in the RePEc Author Service: Muhamed Zulkhibri Abdul Majid ()

No 2016-3, Working Papers from The Islamic Research and Teaching Institute (IRTI)

Abstract: This paper argues that strong economic governance and institution are important elements in improving financial inclusion especially for the poor segment of the society because markets, economic activity and transactions more generally, cannot function well in its absence. This paper utilizes the data of more than 100,000 individuals’ characteristics in the Global Findex database to examine how these different characteristics are associated with financial inclusion. This paper employs probit model to explain measures of financial inclusion and then augmented the model with governance and institutional variables using principal component analysis. The results suggest that neither the impacts of governance indicators nor the freedom indexes are conclusive, while economic freedom show mixed results on financial inclusion. Governance has positive influenced on people wanting to open an account and make saving in formal financial institutions, but negatively impacted on borrowing behaviour. There is also significant differences across countries in particular between Muslim countries and non-Muslim countries in explaining financial inclusion. The study suggests that removing corruption, increasing transparent legal framework, fair judicial proceedings and administration are essential for development and raising financial inclusiveness prospects.

Keywords: Financial Markets; Financial Inclusion; Institutions and Development (search for similar items in EconPapers)
JEL-codes: G20 G21 G28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev
Date: 2016-03-01
References: Add references at CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.irti.org/English/Research/Documents/WP/WP-2016-03.pdf Full text (application/pdf)

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:irtiwp:2016_003

Access Statistics for this paper

More papers in Working Papers from The Islamic Research and Teaching Institute (IRTI) Contact information at EDIRC.
Bibliographic data for series maintained by Research Division ().

 
Page updated 2018-10-20
Handle: RePEc:ris:irtiwp:2016_003