Ozili, Peterson K (2022): Does economic policy uncertainty reduce financial inclusion? Forthcoming in:
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Abstract
This paper examines whether economic policy uncertainty (EPU) reduces the level of financial inclusion. I predict that high EPU should have a negative effect on the level of financial inclusion. I argue that high EPU will discourage financial institutions from providing basic financial services to low end customers and unbanked adults, and this will lead to a decrease in the level of financial inclusion. Using a sample of 22 countries, I find that EPU does not have a significant impact on financial inclusion. None of the nine indicators of financial inclusion have a significant direct relationship with EPU. Also, I find some evidence that the combined effect of high EPU and high nonperforming loans reduces financial inclusion, particularly through bank branch contraction and a reduction in the use of electronic payments. Meanwhile, the use of formal accounts and credit cards increases in times of high credit supply and high EPU.
| Item Type: | MPRA Paper |
|---|---|
| Original Title: | Does economic policy uncertainty reduce financial inclusion? |
| Language: | English |
| Keywords: | Financial inclusion, policy uncertainty, economic policy uncertainty, business cycle, non-performing loan, cost efficiency, cost to income ratio, access to finance, formal account, credit cards, debit cards, mobile payments, electronic payment, borrowings, savings bank branch, unbanked adults. |
| Subjects: | E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E59 - Other G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I31 - General Welfare, Well-Being |
| Item ID: | 111052 |
| Depositing User: | Dr Peterson K Ozili |
| Date Deposited: | 13 Dec 2021 08:08 |
| Last Modified: | 13 Dec 2021 08:08 |
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| URI: | https://mpra.ub.uni-muenchen.de/id/eprint/111052 |
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