Article 2025 · 1 citations

THE MUTUAL RELATIONSHIP BETWEEN FINANCIAL INCLUSION AND EFFECTIVENESS OF MONETARY POLICY: EVIDENCE FROM UPPER-MIDDLE-INCOME COUNTRIES

Yildirim, Hakan, Ozkan, Tuba, Logun, Anil, Dogan, Mesut

Abstract

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.

Keywords

Financial Inclusion Monetary Policy Dynamic Panel Data Analysis ENERGY-CONSUMPTION ECONOMIC-GROWTH INEQUALITY BANKING ACCESS IMPACT GMM

WoS Categories

Business, Finance Economics

Sustainable Development Goals

Industry, Innovation and Infrastructure 10 Reduced Inequality No Poverty Decent Work and Economic Growth

Citation

Journal: EKONOMI POLITIKA & FINANS ARASTIRMALARI DERGISI
Year: 2025
Volume: 10
Issue: 2
Pages: 619-635
eISSN: 2587-151X
DOI: 10.30784/epfad.1642086
WoS UID: WOS:001540970900009

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