The Relationship between Financial Inclusion and Monetary Policy: A Comparative Study of Countries’ in Sub-Saharan Africa and Latin America and the Caribbean

Jungo, João; Madaleno, Mara; Botelho, Anabela

doi:10.1080/15228916.2021.1930810

Cited by 24 publications

(44 citation statements)

References 33 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…To measure financial inclusion, we use the principal component analysis (PCA) technique to include aspects related to geographic and demographic penetration and to represent the supply and demand-side dimensions of financial products and services, specifically, access and use of financial products and services. This complies with the suggestions of other scientific studies that substantiate that using a single variable to measure financial inclusion such as bank account ownership, access to bank credit, total bank branch, ATM per adult or Km2, bank deposit and savings may produce biased results and no practical application (Feghali et al 2021;Jungo et al 2021;Pham et al 2019;Sarma 2008). Additionally, the construction of the financial inclusion index prevented us from using all financial inclusion indicators simultaneously in the estimation, avoiding the multicollinearity problem (Batuo et al 2018).…”

Section: Data Descriptionsupporting

confidence: 87%

“…Respecting the multidimensionality of financial inclusion, we aggregate the dimensions of the supply and demand side of financial products and services. According to Carillo et al (2019), Carvalho (2013), Jungo et al (2021), andSarma (2008) the construction technique of the financial inclusion index is specified as in Equation (1).…”

Section: Model Specificationmentioning

confidence: 99%

“…Financial inclusion is an important component of financial development (Emara and Said 2021;Musau et al 2018;Zulkhibri 2016). However, it plays a relevant role in reducing poverty and inequality through the easy and safe availability of financial products and services, such as savings, bank credit, insurance, and payments (Huang and Zhang 2020;Jungo et al 2021). These provide great advantages in improving households' living conditions when used rationally (Owen and Pereira 2018;Zins and Weill 2016).…”

Section: Introductionmentioning

confidence: 99%

“…Therefore, regulatory pressure to mitigate credit risk and increase bank stability may contribute to the unintended exclusion of the most disadvantaged customers (Ackah and Asiamah 2016;Anarfo et al 2020;Musau et al 2018). Besides, banks play a key role in connecting the financial system to the real economy, yet financial inclusion makes monetary policy more effective in controlling inflation by expanding its effect to a larger proportion of the population (Jungo et al 2021). Gaganis et al (2021) state that financial regulation can have ambiguous impacts on banking efficiency, and can increase or reduce efficiency depending on context.…”

Section: Introductionmentioning

confidence: 99%

“…The selection of Sub-Saharan Africa and Latin America and Caribbean regions for our study is justified in several ways. First, although these groups of countries are located in different geographic regions, many of them have similar economic and social characteristics, namely strong heterogeneity in economic growth, excess natural resources, low levels of economic development, strong population growth, high rates of poverty, and unemployment (Jungo et al 2021;De la Torre et al 2018). Second, in both regions, a considerable number of adults remain without access to financial services and products (Demirgüç-Kunt et al 2018;Mukherjee and Sood 2020).…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

The Effect of Financial Inclusion and Competitiveness on Financial Stability: Why Financial Regulation Matters in Developing Countries?

Jungo

Madaleno

Botelho

2022

JRFM

Self Cite

View full text Add to dashboard Cite

This study aims to assess the effect of financial inclusion and competitiveness on banks’ financial stability, considering the moderating role of financial regulation. To do so, we compare the effects of these variables in Sub-Saharan African (SSA) and Latin American and Caribbean (LAC) countries. Our results suggest that inclusion enhances bank stability in SSA and LAC countries, and financial regulation contributes to increasing financial stability in LAC countries, while we find no statistical significance in the effect of financial regulation on financial stability in SSA countries. Moreover, competitiveness negatively impacts financial stability, and financial regulation moderates the negative effect of competitiveness on financial stability in SSA and LAC countries. We also find that financial inclusion reduces credit risk in SSA countries, and for LAC countries financial inclusion increases credit risk and reduces bank profitability. Regarding the practical implications, this study shows that fostering financial inclusion in the countries under study contributes significantly to improving the welfare of households and especially to the stability of the financial system. The present study allows expanding of the scarce literature by examining the effect of financial inclusion and market structure on financial stability in two different samples, consisting of 41 countries in the SSA region and 31 countries in the LAC region, throughout 2005–2018.

show abstract

Section: Data Descriptionsupporting

confidence: 87%

Section: Model Specificationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

The Effect of Financial Inclusion and Competitiveness on Financial Stability: Why Financial Regulation Matters in Developing Countries?

Jungo

Madaleno

Botelho

2022

JRFM

Self Cite

View full text Add to dashboard Cite

show abstract

Financial stability and sustainable development: Perspectives from fiscal and monetary policy

Dinh,

Oanh,

2024

Int. J Fin Econ

View full text Add to dashboard Cite

This paper studies the relationship between financial stability and sustainable development from the fiscal and monetary policy perspective in 33 developing countries and 7 developed countries in the period 2005–2020. Bayesian regression results show that financial stability positively affects sustainable development in both groups of countries with a low probability of impact. This probability is above 79.3% in developed countries and above 81.5% in developing ones. When considering the role of monetary policy, the direction of impact and probability is different. Specifically, financial stability in the environment of high inflation and increased money supply (ZscoreInf and ZscoreM2) negatively affects sustainable development in both country groups with high probabilities. In contrast, when considering the monetary policy with the foreign exchange reserves tool (ZscoreER), financial stability positively impacts sustainable development with the probability of 89.6% in developed countries and 92.5% in developing one. When considering the role of fiscal policy, financial stability with government spending (ZscoreGE) positively affects sustainable development with a probability of over 99.7% in the two groups of countries. Meanwhile, tax income in a financially stable environment increases the probability of a positive effect at 100% in developed countries, and a negative effect with a probability of 60.9% in developing countries. From the above results, we propose that central banks in both developed and developing countries should aim to stabilize prices and aim to maintain a low inflation rate to help limit shocks to sudden interest rate changes that cause market volatility. This is a premise to help stabilize finance and promote sustainable development. Furthermore, these countries should maintain an adequate foreign exchange reserve to withstand external shocks and ensure they have enough foreign currency to meet macroeconomic needs, which can boost confidence.

show abstract

Sustainable development: Driving force from the relationship between finance inclusion, green finance and green growth

Oanh

2023

Sustainable Development

View full text Add to dashboard Cite

This paper studies sustainable development and its driving force—the linkage between financial inclusion, green finance and green growth in 14 low financial development countries (LFDCs) and 11 high financial development countries (HFDCs) from 2005 to 2019. Bayesian regression results show that when green finance is not taken into account, the probabilities that green GDP growth positively impacts sustainable development in HFDCs and LFDCs are 58.31% and 61.06%, respectively. The probability that financial inclusion positively impacts sustainable development in HFDCs is 88.34% and it is 100% in LFDCs. The interaction between green finance and financial inclusion positively impacts sustainable development in both groups of countries. In addition, this article also provides evidence that the rate of urbanization and trade openness positively affect sustainable development. In contrast, the rate of inflation and the population growth rate impact sustainable development negatively.

show abstract

The Relationship between Financial Inclusion and Monetary Policy: A Comparative Study of Countries’ in Sub-Saharan Africa and Latin America and the Caribbean

Cited by 24 publications

References 33 publications

The Effect of Financial Inclusion and Competitiveness on Financial Stability: Why Financial Regulation Matters in Developing Countries?

The Effect of Financial Inclusion and Competitiveness on Financial Stability: Why Financial Regulation Matters in Developing Countries?

Financial stability and sustainable development: Perspectives from fiscal and monetary policy

Sustainable development: Driving force from the relationship between finance inclusion, green finance and green growth

Contact Info

Product

Resources

About