This paper examines the causal relationship between governance indicators and economic growth in Afghanistan. We use a set of quarterly time series data from 2003Q1 to 2018Q4 to test our hypothesis. Following Toda and Yamamoto’s (J Econom 66(1–2):225–250, 1995. 10.1016/0304-4076(94)01616-8) vector autoregressive model and the modified Wald test, our empirical results show a unidirectional causality between the government effectiveness, rule of law, and the economic growth. Our findings exhibit significant causal relationships running from economic growth to the eradication of corruption, the establishment of the rule of law, quality of regulatory measures, government effectiveness, and political stability. More interestingly, we support the significant multidimensional causality hypothesis among the governance indicators. Overall, our findings not only reveal causality between economic growth and governance indicators, but they also show interdependencies among the governance indicators.

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This study aims to examine the effects of financial inclusion on poverty reduction and income inequality with a focus on South Asian economies from 2004 to 2020 by employing dynamic panel models augmented with a comprehensive composite financial inclusion index and a set of well-known macroeconomic predictors. The primary results confirm the long-run relationships between financial inclusion, poverty headcount ratio and the Gini index, while the results of the cross-sectionally augmented autoregressive distributed lags model indicate that financial inclusion is significantly effective in reducing poverty and income disparities. Moreover, the findings reveal that real per capita income, institutional quality, age dependency ratio, credit to the private sector, inflation rate, school enrolment rate, trade openness, ratio of mobile users, and information and communication technologies are highly significant in intermediating the aggregate effects of financial inclusion on reducing poverty and income inequality. The findings clearly show that the greater impact of financial inclusion on reducing poverty and income inequality is primarily based on the development, enhancement and promotion of financial inclusion in South Asian economies, where the financially excluded segment constitutes a significant proportion of society.

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