Financial inclusion and macroeconomic outcomes in developing economies: pre-COVID insights on growth, stability, and inequality
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Date
2026
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Abstract
This study examines the impact of fnancial inclusion on key socio-economic outcomes, namely economic growth, fnancial stability, and income inequality, during the pre-COVID era. We develop a composite Financial Inclusion Index (FII) using a multidimensional framework encompassing indicators of availability, usage, and penetration dimen sions. The analysis covers 60 developing countries from 2005 to 2019 and employs the two-step System Generalised Method of Moments (GMM) to address potential endogeneity and dynamic panel bias. The results reveal that fnan cial inclusion signifcantly promotes economic growth, particularly by improving access to banking. However, it shows no statistically signifcant relationship with fnancial stability. In contrast, higher fnancial inclusion appears to widen income inequality, likely due to unequal access to fnancial services and uneven distribution of benefts. By applying a unifed FII across three macroeconomic outcomes using a consistent sample and methodology, this study provides comprehensive insights into the multifaceted efects of fnancial inclusion in developing economies. The fndings underscore the need for policies that enhance access to fnance, strengthen fnancial literacy, and promote responsible lending to ensure that fnancial inclusion contributes to inclusive and stable economic development.
Keywords
Financial inclusion , Economic growth , Financial stability , Income inequality , Developing economies , Cross-country panel data , Financial development
Citation
Hasan, A. N., Ibrahim, M. H., & Salim, K. (2026). Financial inclusion and macroeconomic outcomes in developing economies: Pre-COVID insights on growth, stability, and inequality. Future Business Journal, 12, Article 30. https://doi.org/10.1186/s43093-026-00729-5
Publisher
Springer Nature