Controlling corruption in African countries: innovation, financial inclusion and access to education as alternative measures

Abstract

PurposeThis study aims to examine the impact of financial inclusion and financial innovation on corruption, considering the moderating role of education, as well as identify the specific modality of digital inclusion and payments that contribute to corruption reduction.Design/methodology/approachThe study uses a representative sample consisting of 46 African countries in three different years 2011, 2014 and 2017. On the data, feasible generalized least squares (FGLS), instrumental variables – two stages least squares (IV-2SLS) and two-stage generalized method of moments (IV-2GMM) model estimation methods were employed.FindingsThe results suggest that financial inclusion and education significantly reduce corruption. As well, the interaction between financial inclusion and education reduces corruption. Additionally, the authors find that the expansion of bank credit and the use of credit and debit cards are the specific modes of financial inclusion and digital payments that can contribute to corruption reduction.Research limitations/implicationsThis study awakens policymakers in African countries about the need to consider education as an alternative measure to support financial inclusion and reduce the use of physical cash in transactions for an effective fight against corruption.Practical implicationsRegarding practical implications, the study shows that financial inclusion besides reducing poverty for households can contribute to macroeconomic stability in Africa.Originality/valueThe study uses a representative sample composed of 46 African countries and considers the role of education in moderating the relationship between financial inclusion and financial innovation on corruption. Furthermore, the study identifies the specific modality of financial inclusion and digital payments that contribute to corruption reduction.

Institutions and economic growth: the role of financial inclusion, public spending on education and the military

“…Supplementary Table 1 shows the results of the Kaiser–Meyer–Olkin (KMO) adequacy test, which serves to validate the use of institutional quality indicators and financial inclusion indicators. The KMO test values for financial inclusion were 62.6% and for institutional quality 85.6%, so it is appropriate to use the respective indicators (Boateng et al ., 2019; Jungo et al ., 2023).…”

“…The data are extracted from three different World Bank databases, namely World Governance Indicators (WGI), World Development Indicators (WDI), and Financial Development Indicators (GFD). Several empirical studies have used the same databases (Jungo et al ., 2022a, b, 2023; Singh, 2021; Tehulu, 2022; Zhuo et al. , 2021).…”

“…Technological innovations used in developing countries rely heavily on Internet access (Jungo et al ., 2023). Internet access allows to solve the infrastructure barrier in implementing financial inclusion (Qamruzzaman and Jianguo, 2017).…”

“…The six variables that make up the aggregate indicator of institutional quality were measured on a scale of 0 (Poor institutional quality) to 100 (Strong institutional quality). Corruption indicates how power is used for private gain (Jungo et al, 2022a(Jungo et al, , 2023. Political stability indicates the likelihood of politically motivated violence, terrorism, armed conflict occurring (Singh, 2021;Zhuo et al, 2021).…”

“…Empirical research generally uses education to measure human capital, specifically the average years of schooling (Glawe and Wagner, 2022), therefore, human capital is a relevant factor in the analysis of economic growth and public spending on education is crucial to maintain human capital, on the other hand, education is fundamental for socioeconomic transformation of country, contributing considerably to efficient use of scarce resources and achieving rapid and consistent technological advancement and development (Alam et al ., 2022). Moreover, education is a powerful tool to control corruption (Asongu and Nwachukwu, 2015; Jungo et al ., 2023) and stimulates moral values which is fundamental for strengthening institutions.…”