The Mutual Relationship between Financial Inclusion and Effectiveness of Monetary Policy: Evidence from Upper-Middle-Income Countries

Yıl 2025, Cilt: 10 Sayı: 2, 619 - 635, 30.06.2025

Hakan Yıldırım , Tuba Özkan , Anıl Lögün , Mesut Doğan

https://doi.org/10.30784/epfad.1642086

Öz

Enhancing financial inclusion is crucial for achieving global objectives such as sustainable growth, improved societal welfare, and poverty reduction. Due to its importance, financial inclusion has recently become a key policy issue and a widely studied topic. This study investigates the relationship between financial inclusion and monetary policy in upper-middle-income countries using the Two-Step System GMM and Panel Granger Causality methods. The findings reveal a bidirectional negative relationship between inflation and financial inclusion. Inflation negatively affects financial inclusion, while an increase in financial inclusion has a reducing effect on inflation. Additionally, digitalization, regulatory quality, and money supply positively affect financial inclusion, while the growth of money supply and deposit interest rates increase inflation. According to Granger causality analysis, there is a causality running from financial inclusion to the inflation rate. Accordingly, policymakers in upper-middle-income countries are advised to adopt balanced monetary policies and consider that increasing financial inclusion can help mitigate the adverse effects of inflation.

Anahtar Kelimeler

Financial Inclusion , Monetary Policy , Dynamic Panel Data Analysis

Finansal Kapsayıcılık ile Para Politikası Etkinliği Arasındaki Karşılıklı İlişki: Üst-Orta Gelirli Ülkelerden Kanıtlar

Öz

Finansal kapsayıcılığın artırılması; sürdürülebilir büyüme, toplumsal refahın yükseltilmesi ve yoksulluğun azaltılması gibi küresel hedeflere ulaşmada kritik bir unsurdur. Bu önem doğrultusunda, finansal kapsayıcılık son yıllarda küresel bir politika önceliği ve literatürde sıkça incelenen bir konu haline gelmiştir. Bu çalışma, üst-orta gelirli ülkelerde finansal kapsayıcılık ve para politikası arasındaki ilişkiyi İki Aşamalı Sistem GMM ve Panel Granger Nedensellik yöntemleriyle incelemektedir. Bulgular, enflasyon ile finansal kapsayıcılık arasında çift yönlü negatif bir ilişki olduğunu göstermektedir. Enflasyon finansal kapsayıcılığı negatif yönde etkilerken, finansal kapsayıcılıktaki artışta enflasyonu düşürücü etki yapmaktadır. Ayrıca dijitalleşme, düzenleyici kalite ve para arzı finansal kapsayıcılığı pozitif yönde etkilerken, para arzındaki büyüme ve mevduat faizleri enflasyonu artırmaktadır. Granger nedensellik sonuçları, finansal kapsayıcılıktan enflasyona doğru bir nedensellik olduğunu göstermektedir. Bu doğrultuda, üst-orta gelirli ülkelerdeki politika yapıcılara dengeli para politikaları benimsemeleri ve finansal kapsayıcılığın enflasyon üzerindeki olumsuz etkileri hafifletebileceğini dikkate almaları önerilmektedir.

Anahtar Kelimeler

Finansal Kapsayıcılık , Para Politikası , Dinamik Panel Veri Analizi

Kaynakça

• Al-Samadi, M.O. (2023). Examining the relationship between digital finance and financial inclusion: Evidence from MENA countries, Borsa İstanbul Rewiew, 23(2), 464-472. https://doi.org/10.1016/j.bir.2022.11.016
• Anarfo, E.B., Abor, J.Y., Osei, K.A. and Gyeke-Dako, A. (2019). Monetary policy and financial inclusion in Sub-Sahara Africa: A panel VAR approach. Journal of African Business, 20(4), 549–572. https://doi.org/10.1080/15228916.2019.1580998
• Aportela, F. (1999). Effects of financial access on savings by low-income people. Retrieved from https://users.nber.org/~rdehejia/!@$devo/Lecture%2006%20Microcredit/supplemental/Aportela.pdf
• Arellano, M. and Bover, O. (1995). Another look at the instrumental-variable estimation of error-components models. Journal of Econometrics, 68(1), 29-51. https://doi.org/10.1016/0304-4076(94)01642-D
• Arner, D.W., Buckley, R.P., Zetzsche, D.A. and Veidt, R. (2020). Sustainability, FinTech and financial inclusion. European Business Organization Law Review, 21, 7-35. https://doi.org/10.1007/s40804-020-00183-y
• Asadullah, M.N., Savoia, A. and Mahmud, W. (2014). Paths to development: Is there a Bangladesh surprise? World Development, 62, 138–154. https://doi.org/10.1016/j.worlddev.2014.05.013
• Ascari, G., Colciago, A. and Rossi, L. (2011). Limited asset market participation: Does it really matter for monetary policy (Bank of Finland Research Discussion Paper No. 15/2011). https://doi.org/10.2139/ssrn.1948412
• Ashraf, N., Karlan, D. and Yin, W. (2010). Female empowerment: Impact of a commitment savings product in the Philippines. World Development, 38(3), 333-344. https://doi.org/10.1016/j.worlddev.2009.05.010
• Beck, T., Demirgüç-Kunt, A. and Levine, R. (2007). Finance, inequality and the poor. Journal of Economic Growth, 12, 27-49. https://doi.org/10.1007/s10887-007-9010-6
• Beck, T., Demirgüç-Kunt, A. and Levine, R. (2009). Financial institutions and markets across countries and over time-data and analysis (World Bank Policy Research Working Paper Series No. 4943). Retrieved from https://ssrn.com/abstract=1414705
• Beegle, K., Dehejia, R. and Gatti, R. (2003). Child labor, crop shocks, and credit constraints (NBER Working Paper Series No. 10088). Retrieved from https://www.nber.org/system/files/working_papers/w10088/w10088.pdf
• Blundell, R. and Bond, S. (1998). Initial conditions and moments restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115-143. https://doi.org/10.1016/S0304-4076(98)00009-8
• Bruhn, M. and Love, I. (2014). The real impact of improved access to finance: Evidence from Mexico. The Journal of Finance, 69(3) 1347–1376. https://doi.org/10.1111/jofi.12091
• Burgess, R. and Pande, R. (2005). Do rural banks matter? Evidence from the Indian social banking experiment. American Economic Review, 95(3), 780-795. https://doi.org/10.1257/0002828054201242
• CAFI. (2018). Growing with pain: Digital financial inclusion in China Retrieved from https://www.findevgateway.org/
• Célerier, C. and Matray, A., (2019). Bank-branch supply, financial inclusion, and wealth accumulation. The Review of Financial Studies, 32(12), 4767–4809. https://doi.org/10.1093/rfs/hhz046
• Chao, X., Kou, G., Peng, Y. and Viedma, E.H. (2021). Large-scale group decision-making with non-cooperative behaviors and heterogeneous preferences: An application in financial inclusion. European Journal of Operational Research, 288(1), 271–293. https://doi.org/10.1016/j.ejor.2020.05.047
• Demirgüç-Kunt, A. and Klapper, L. (2013). Measuring financial inclusion: Explaining variation in use of financial services across and within countries. Brookings Papers on Economic Activity, 1, 279–340. https://doi.org/10.1353/eca.2013.0002
• Demirgüç-Kunt, A., Klapper, L., Singer, D. and Ansar, S. (2022). The global Findex database 2021. Retrieved from http://hdl.handle.net/10986/37578
• Di Bartolomeo, G. and Rossi, L. (2007). Effectiveness of monetary policy and limited asset market participation: Neoclassical versus Keynesian effects. International Journal of Economic Theory, 3(3), 213–218. https://doi.org/10.1111/j.1742-7363.2007.00056.x
• El Bourainy, M., Salah, A. and El Sherif, M. (2021). Assessing the impact of financial inclusion on inflation rate in developing countries. Open Journal of Social Sciences, 9, 397-424. https://doi.org/10.4236/jss.2021.91030
• El Sherif, M. (2019). The relationship between financial inclusion and monetary policy transmission: The case of Egypt. In J. Rotschedl (Ed.), Proceedings of the 45th international academic conference (pp. 91-115). https://doi.org/10.20472/IAC.2019.045.014
• Evans, O. (2016a). Determinants of financial inclusion in Africa: A dynamic panel data approach (MPRA Paper No. 81326). Retrieved from https://mpra.ub.uni-muenchen.de/
• Evans, O. (2016b). The effectiveness of monetary policy in Africa: Modeling the impact of financial inclusion. Iranian Economic Review, 20(3), 327-337. doi:10.22059/ier.2016.58961
• Fouejieu, A., Sahay, R., Cihak, M. and Chen, S. (2020). Financial inclusion and inequality: A cross-country analysis. The Journal of International Trade & Economic Development, 29(8), 1018-1048. https://doi.org/10.1080/09638199.2020.1785532
• Fowowe, B. (2020). The effects of financial inclusion on agricultural productivity in Nigeria. Journal of Economics and Development, 22(1), 61-79. https://doi.org/10.1108/JED-11-2019-0059
• Galí, D., Salido, D.L. and Valles, J. (2004). Rule of thumb consumers and the design of interest rate rule (NBER Working Paper Series No. 10392). Retrieved from https://www.nber.org/system/files/working_papers/w10392/w10392.pdf
• Gallego-Losada, M.J., Montero-Navarro, A., García-Abajo, E. and Gallego-Losada, R. (2023). Digital financial inclusion. Visualizing the academic literature. Research in International Business and Finance, 64, 101862. https://doi.org/10.1016/j.ribaf.2022.101862
• Gomber, P., Koch, J.A. and Siering, M. (2017). Digital finance and FinTech: Current research and future research directions. Journal of Business Economics, 87, 537–580. https://doi.org/10.1007/s11573-017-0852-x
• Heritage Foundation. (2023). Index of economic freedom. Retrieved from https://www.heritage.org/ Accessed May 1, 2023
• Honohan, P. (2008). Cross-country variation in household access to financial services. Journal of Banking & Finance, 32 (11), 2493-2500. https://doi.org/10.1016/j.jbankfin.2008.05.004
• IMF. (2023). Financial access survey (FAS). Retrieved from https://data.imf.org/en
• Jungo, J., Madaleno, M. and Botelho, A. (2022). The relationship between financial inclusion and monetary policy: A comparative study of countries’ in Sub Saharan Africa and Latin America and the Caribbean. Journal of African Business, 23(3), 794-815. https://doi.org/10.1080/15228916.2021.1930810
• Kahouli, B. (2017). The short and long run causality relationship among economic growth, energy consumption and financial development: Evidence from South Mediterranean countries (SMCs). Energy Economics, 68, 19-30. https://doi.org/10.1016/j.eneco.2017.09.013
• Kazemikhasragh, A., Cicchiello, A.F., Monferrá, S. and Girón, A. (2022). Gender inequality in financial inclusion: An exploratory analysis of the Middle East and North Africa. Journal of Economic Issues, 56(3), 770-781. https://doi.org/10.1080/00213624.2022.2079936
• Khan, H.R. (2011). Financial inclusion and financial stability: Are they two sides of the same coin? Retrieved from https://www.bis.org/review/r111229f.pdf
• Kouladoum, J.-C., Wirajing, M.A.K. and Nchofoung, T.N. (2022). Digital technologies and financial inclusion in Sub-Saharan Africa. Telecommunications Policy, 46(9), 102387. https://doi.org/10.1016/j.telpol.2022.102387
• Kulkarni, L. and Ghosh, A. (2021). Gender disparity in the digitalization of financial services: challenges and promises for women’s financial inclusion in India. Gender, Technology and Development, 25(2), 233-250. https://doi.org/10.1080/09718524.2021.1911022
• Lapukeni, A.F. (2015). The impact of financial inclusion on monetary policy effectiveness: The case of Malawi. International Journal of Monetary Economics and Finance, 8(4), 360–384. https://doi.org/10.1504/IJMEF.2015.073229
• Le, T.H., Le, H.C. and Taghizadeh-Hesary, F. (2020). Does financial inclusion impact CO2 emissions? Evidence from Asia. Finance Research Letters, 34, 101451. https://doi.org/10.1016/j.frl.2020.101451
• Lenka, S.K. and Bairwa, A.K. (2016). Does financial inclusion affect monetary policy in SAARC countries? Cogent Economics & Finance, 4(1), 1-8. https://doi.org/10.1080/23322039.2015.1127011
• Liaqat, I., Gao, Y., Rehman, F.U., Lakner, Z. and Oláh, J. (2022). National culture and financial inclusion: Evidence from belt and road economies. Sustainability, 14(6), 3405. https://doi.org/10.3390/su14063405
• Liu, N., Hong, C. and Sohail, M.T. (2022). Does financial inclusion and education limit CO2 emissions in China? A new perspective. Environmental Science Pollution Research, 29, 18452-18459. https://doi.org/10.1007/s11356-021-17032-1
• Manko, K. and Watkins, T.A. (2022). Microfinance and SDG 7: Financial impact channels for mitigating energy poverty. Development in Practice, 32(8), 1036-1048. https://doi.org/10.1080/09614524.2020.1863338
• Marron, D. (2013). Governing poverty in a neoliberal age: New labour and the case of financial exclusion. New Political Economy, 18(6), 785-810. https://doi.org/10.1080/13563467.2012.753043
• Mbutor, M.O. and Uba, I.A. (2013). The impact of financial inclusion on monetary policy in Nigeria. Journal of Economics and International Finance, 5(8), 318-326. https://doi.org/10.5897/JEIF2013.0541
• Mehrotra, A. and Yetman, J. (2014). Financial inclusion and op¬timal monetary policy (BIS Working Papers Series No. 476). Retrieved from https://www.bis.org/publ/work476.pdf
• Murshed, M., Ahmed, R., Al-Tal, R.M., Kumpamool, C., Vetchagool, W. and Avarado, R. (2023). Determinants of financial inclusion in South Asia: The moderating and mediating roles of internal conflict settlement. Research in International Business and Finance, 64, 101880, https://doi.org/10.1016/j.ribaf.2023.101880
• Mushtaq, R. and Bruneau, C. (2019). Microfinance, financial inclusion and ICT: Implications for poverty and inequality. Technology in Society, 59, 101154. https://doi.org/10.1016/j.techsoc.2019.101154
• Naceur, S.B., Barajas, A. and Massara, A. (2015). Can Islamic banking increase financial inclusion? (IMF Working Paper Series No. 15/31). Retrieved from https://www.imf.org/external/pubs/ft/wp/2015/wp1531.pdf
• Neaime, S. and Gaysset, I. (2018). Financial inclusion and stability in MENA: Evidence from poverty and inequality. Finance Research Letters, 24, 230-237. https://doi.org/10.1016/j.frl.2017.09.007
• Omar, M.A. and Inaba, K. (2020). Does financial inclusion reduce poverty and income inequality in developing countries? A panel data analysis. Journal of Economic Structures, 9(37). https://doi.org/10.1186/s40008-020-00214-4
• Ouyang, Y. and Li, P. (2018). On the nexus of financial development, economic growth, and energy consumption in China: New perspective from a GMM panel VAR approach. Energy Economics, 71, 238-252. https://doi.org/10.1016/j.eneco.2018.02.015
• Ozili, P.K. (2018). Impact of digital finance on financial inclusion and stability. Borsa Istanbul Review, 18(4), 329-340. https://doi.org/10.1016/j.bir.2017.12.003
• Ozili, P.K. (2020). Financial Inclusion Research Around the World: A Review, Forum for Social Economics. http://dx.doi.org/10.2139/ssrn.3515515
• Pesaran, M.H. (2007). A simple panel unit root test in the presence of cross‐section dependence. Journal of Applied Econometrics, 22(2), 265-312. https://doi.org/10.1002/jae.951
• Prina, S. (2015). Banking the poor via savings accounts: Evidence from a field experiment. Journal of Development Economics, 115, 16-31. https://doi.org/10.1016/j.jdeveco.2015.01.004
• Qu, C., Shao, J. and Shi, Z. (2020). Does financial agglomeration promote the increase of energy efficiency in China? Energy Policy, 146, 111810. https://doi.org/10.1016/j.enpol.2020.111810
• Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. The Stata Journal, 9(1), 86–136. https://doi.org/10.1177/1536867X0900900106
• Sadorsky, P. (2010). The impact of financial development on energy consumption in emerging economies. Energy Policy, 38(5), 2528-2535. https://doi.org/10.1016/j.enpol.2009.12.048
• Saraswati, B.D., Maski, G., Kaluge, D. and Sakti, R.K. (2020). The effect of financial inclusion and financial technology on effectiveness of the Indonesian monetary policy. Business: Theory and Practice, 21, 230-243. https://doi.org/10.3846/btp.2020.10396
• Sarma, M. (2008). Index of financial inclusion (Working Paper Series No. 215). Retrieved from https://core.ac.uk/download/pdf/6328194.pdf
• Schuetz, S. and Venkatesh, V. (2020). Blockchain, adoption, and financial inclusion in India: Research opportunities. International Journal of Information Management, 52, 101936. https://doi.org/10.1016/j.ijinfomgt.2019.04.009
• Shahbaz, M., Li, J., Dong, X. and Dong, K. (2022). How financial inclusion affects the collaborative reduction of pollutant and carbon emissions: The case of China. Energy Economics, 107, 108947. https://doi.org/10.1016/j.eneco.2022.105847
• Sinclair, S. (2013). Financial inclusion and social financialisation: Britain in a European context. International Journal of Sociology and Social Policy, 33(11-12), 658-676. https://doi.org/10.1108/IJSSP-09-2012-0080
• Suman. (2017). Financial inclusion: A systematic literature review of recent Studies. Asian Journal of Research in Banking and Finance, 7, 14-18. https://doi.org/10.5958/2249-7323.2017.00127.4
• Swamy, V. (2014). Financial inclusion, gender dimension, and economic impact on poor households. World Development, 56, 1-15. https://doi.org/10.1016/j.worlddev.2013.10.019
• Tian, L. and Kling, G. (2021). Financial inclusion and financial technology: finance for everyone? The European Journal of Finance, 28(1), 1-2. https://doi.org/10.1080/1351847X.2021.1981418
• Van, T.L., Nguyen, N.T., Nguyen, N.L. and Vo, D.H. (2022). The asymmetric effects of institutional quality on financial inclusion in the Asia-Pacific region. Heliyon, 8(12), 1-10. https://doi.org/10.1016/j.heliyon.2022.e12016
• Von Fintel, D. and Orthofer, A. (2020). Wealth inequality and financial inclusion: Evidence from South African tax and survey records. Economic Modelling, 91, 568-578. https://doi.org/10.1016/j.econmod.2020.02.001
• WDI. (2023). World Development Indicators (WDI). Retrieved from https://databank.worldbank.org/source/world-development-indicators
• WGI. (2023). Worldwide Governance Indicators (WGI). Retrieved from https://databank.worldbank.org/source/worldwide-governance-indicators
• World Bank. (2022). Financial inclusion. Retrieved from https://www.worldbank.org/en/topic/financialinclusion/overview#1
• Yao, X., Yasmeen, R., Hussain, J. and Shah, W. (2021). The repercussions of financial development and corruption on energy efficiency and ecological footprint: Evidence from BRICS and next 11 countries. Energy, 223, 120063. https://doi.org/10.1016/j.energy.2021.120063
• Yu, Y. and Tang, K. (2023). Does financial inclusion improve energy efficiency? Technological Forecasting and Social Change, 186, 122110. https://doi.org/10.1016/j.techfore.2022.122110