The effects of financial inclusion on economic growth and stability in the provinces of Iran
Subject Areas : Economic Development, Innovation, Technological Change, and GrowthTahmoures Elyasi Bakhtiari 1 , Abbas Memarnezhad 2 , Farhad Dejpasand 3 , Farhad Ghaffari 4
1 - * PhD Candidate in Economics, Faculty of Management and Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran, tahmoures.elyasi@srbiau.ac.ir
2 - Associate Professor of Economics, Faculty of Management and Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran, (Corresponding Author) memarnejad@srbiau.ac.ir
3 - Assistant Professor, School of Economics and Political Science, Shahid Beheshti University
4 - Associate Professor of Economics, Faculty of Management and Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran, ghaffari@srbiau.ac.ir
Keywords: financial inclusion, growth, economic stability, panel vector autoregression method with distribution intervals JEL Classification: G32, G10, F37, F41,
Abstract :
Abstract In recent decades, the issue of strengthening the financial inclusion of the general public in accessing financial services has become one of the priorities of policy makers and senior managers. The reason for the importance of this issue is that the strengthening of financial inclusion provides access to financing services for all income groups (including the poor), and this can strengthen the economic growth of countries and increase economic prosperity in the medium and long term. Therefore, in this study, the effects of financial inclusion on economic growth and stability in 30 provinces of the country during the period of 2006-2021 have been investigated using the vector autoregression method with distribution breaks, fully modified ordinary least squares and vector error correction. The results of the estimation of economic growth and stability model show that financial inclusion has increased economic stability and economic growth in the long term. It can be argued that financial inclusion from both supply and demand channels has increased economic stability and growth and development of investments. This impact can come from providing favorable financial services, improving and upgrading the financial system.
- رحیم زاده، فرزاد، شکوهی فرد، سیامک و هاتف حاضری نیری، (1401)، اثر فساد بر شمول مالی )کاربرد رهیافت گشتاورهای تعمیم یافته سیستمی(، فصلنامه علمی مدسازی اقتصادی، دوره 16، شماره 57، بهار 1401، صص 33-48.
- رضایی، مهدی (1395)، تأثیر توسعه مالی بر رشد اقتصادی در ایران، دومین همایش بین المللی مدیریت، اقتصاد و توسعه، تهران.
- سارانی، سمیه (1398)، «رابطه بین شمول مالی و باز بودن تجارت در ایران؛ با استفاده از الگوی NARDL»، پایان نامه کارشناسی ارشد رشته اقتصاد گرایش توسعه اقتصادی، دانشگاه سیستان و بلوچستان.
- سموعی، عباس؛ حسنوند، داریوش؛ خوچیانی، رامین و زاهد غروی، مهدی (1399)، «مدلسازی فراگیری مالی و اثرات آستانهای آن بر رشد اقتصادی کشورهای عضو اوپک (رگرسیون پانل آستانهای)»، فصلنامه اقتصاد کاربردی، 10(32،33)، 66-77.
- صالحیفر، محمد و زمان، الهه (1397)، «نقش فراگیری مالی در توسعه اقتصادی فراگیر»، سومین کنفرانس بینالمللی مدیریت، حسابداری و حسابرسی پویا.
- فرجزاده اولقی، زهرا، نقیبی، محمد (1379). بررسی تأثیر سیاستهای پولی و مالی بر اقتصاد ایران در بستری از رکود اقتصادی. اقتصاد کاربردی. 8(24)، 48-39.
- گوهری، لیدا، کریمی موغاری، زهرا، زروکی، شهریار (1397)، «تحلیل اثر تعاملی کیفیت نهادی و توسعه بخش بانکی بر رشد اقتصادی: کاربردی از شاخص ترکیبی مالی»، فصلنامه علمی نظریههای کاربردی اقتصاد، 5(1)، 183-212.
- محمدی، تیمور؛ ناظمان، حمید و خداپرست پیرسرایی، یونس (1393)، «بررسی رابطه علیت پویای بین توسعه مالی، بازبودن تجاری و رشد اقتصادی؛ مقایسه موردی دو کشور نفتی ایران و نروژ»، پژوهشنامه اقتصاد انرژی ایران، 3(10)، 178-151.
- معبودی، رضا (1402)، شمول مالی و بیکاری در مناطق شهری و روستایی ایران، فصلنامه علمی مدسازی اقتصادی، دوره 17، شماره 62، تابستان 1402، صص 59-74.
- Salehifar, Mohammad and Zaman, Elaha (2017), "The role of financial inclusion in inclusive economic development", the third international conference on management, accounting and dynamic auditing (In Persian).
- Sarani, Somieh (2018), "The relationship between financial inclusion and trade openness in Iran; Using the NARDL model", master's thesis in the field of economics, economic development, University of Sistan and Baluchistan (In Persian).
- Adnan, N (2011). Measurement of Financial Development: A Fresh Approach. Qatar: 8th International Conference on Islamic Economics and Finance.
- Afonso, A., & Blanco-Arana, C., (2024), Does financial inclusion enhance per capita income in the least developed countries?, International Economics, Volume 177, March 2024, 100479.
- Agnello, L, Mallick, S.K and Sousa, R.M (2012). Financial reforms and income inequality, Economics Letters, Vol. 116 No. 3
- Baltagi, Badi, (2005). “Economics Analysis of Panel Data”. Third Edition John Wiley and Sons, Ltd.
- Bateman M.,(2010).”Why Doesn’t Microfinance Work? The Destructive Rise of Local Neoliberalism”. London: Zed Books.
- Beck T, Demirgu c¸ Kunt A, Levine R., (2007). “Finance, inequality, and the poor”. J Econ Growth, 12:27-49.
- Bougatef, K. (2017). Determinants of bank profitability in Tunisia: Does corruption matter? Journal of Money Laundering Control, 20(1), 70-78.
- Chinoda, T., & Mashamba, T. (2021). Financial inclusion, bank competition and economic growth in Africa. Journal of Economic and Financial Sciences, 14(1), 9.
- Claessens, S and Perotti, E (2007). Finance and inequality: channels and evidence, Journal of Comparative Economics, Vol. 35 No. 4.
- Clarke GRG, Xu LC, Zou H., (2006). “Finance and inequality: what do the data tell us”. South Econ, 72:578-596.
- Dabla-Norris, E, Ji, Y, Townsend, R & Unsal, F (2015). Identifying Constraints to Financial Inclusion and TheirImpact on GDP and Inequality: A Structural Framework for Policy, D.C. Washington: International Monetary Fund.
- Demirgu c¸ Kunt A, Beck T, Honohan P (Eds), (2016). “The World Bank Finance for All? Policies and Pitfalls in Expanding Access”. A World Bank Policy Research Report, Development Research Group (DECRG). Washington DC: The World Bank Group.
- FARAJZADEH, ZAHRA, & NAGHIBI, MOHAMMAD. (2018). The Effect of Monetary and Fiscal Policies on Iran's Economy in the Situation of Economic Downturn. IRANIAN JOURNAL OF APPLIED ECONOMICS, 8(24 ), 39-48 (In Persian).
- Gohari, L., Karimi Moughari, Z., & Zaroki, S. (2018). An Interactive Effect of Institutional Quality and Banking Development on Economic Growth: The Applied of Financial Combined Indicator. Quarterly Journal of Applied Theories of Economics, 5(1), 183-212 (In Persian).
- Han, R., & Melecky, M. (2013). Financial inclusion for financial stability: Access to bank deposits and the growth of deposits in the Global Financial Crisis. Policy Research Working Paper Series 6577, the World Bank.
- Haneef Malik, A., bin Md Isa, A. H., bin Jais, M., Rehman, A. U., & Ali Khan, M., (2022), Financial stability of Asian Nations: Governance quality and financial inclusion, Borsa Istanbul Review, Volume 22, Issue 2, March 2022, Pages 377-387.
- Hua, X., Bi, J., & Shi, S., (2023), The appropriate level of financial inclusion: The perspective of financial stability, China Economic Quarterly International, Volume 3, Issue 3, Pages 167-178.
- Huang , S., Shu , Z & Manli , C., (2024), Role of Social Capital and Financial Inclusion in Sustainable Economic Growth, Research in International Business and Finance,102525.
- Kao, C. (1999), "Spurious Regression and Residual Based Test for Co-integration in Panel Data", Journal of Econometrics, 99.
- Karpowicz, I (2014). Financial Inclusion, Growth and Inequality: A Model Application to Colombia
- Kim, D. Y. J Hassan F.(2018). Financial Inclusion and Economic Growth in IOC countries. Research in International Business and Finance, 43, 1- 14
- King RG, Levine R., (1993).”Finance and growth Schumpeter might be right”. Q J Econ, 10:717-737.
- Levine R.(1998),”The legal environment, banks, and long-run economic growth”. J Money Credit Bank, 30:596-613.
- Levine R.,(2005).”Finance and growth: theory and evidence. In Handbook of Economic Growth, Vol. 1. Edited by Aghion P, Durlauf S. Amsterdam: Elsevier, 866-934.
- Maaboudi,Reza.(2023). The Financial Inclusion and Unemployment in Urban and Rural Areas of Iran.Economic Modeling,62, 59-74 (In Persian).
- McKillop D, Wilson J. (2007), “Financial exclusion”. Public Money Manage, 27:9-12.
- McKinnon, R (1973). Money and Capital in Economic Development, Washington, DC: Brookings Institution.
- Mehrotra, A and J Yetman (2014): “Financial inclusion and optimal monetary policy”, BIS Working Papers, no 476, December.
- Mohammadi, T., nazeman, H., & khodaparast persarai, Y. (2014). A Dynamic Causality Relation Between Financial Development, Trade Openness and Economic Growth: A Comparison Between Iran and Norway. Iranian Energy Economics, 3(10), 151-178 (In Persian).
- Mohd Daud, S., N, Ahmad, A.,H, & Trinugroho, I., (2024), Financial inclusion, digital technology, and economic growth: Further evidence, Research in International Business and Finance, Volume 70, Part B, 102361.
- Mohd Daud, S. N., & Ahmad, A.H., (2023), Financial inclusion, economic growth and the role of digital technology, Finance Research Letters, Volume 53, 103602.
- Morgan, P. J., & Pontines, V. (2018). Financial stability and financial inclusion: The case of SME lending. Singapore Economic Review, 1, 111-124.
- Norris, E. D, Ji, Y, Townsend, R & Unsal, D. F (2015). Identifying Constraints to Financial Inclusion and Their Impact on GDP and Inequality: A Structural Framework for Policy. IMF Working Paper 22. IMF: Washington DC.
- Ong, H.,B., Wasiuzzaman, S., Chong, L. L., & Choon, S., W, (2023), Digitalisation and financial inclusion of lower middle-income ASEAN, Celpress, Volume 9, Issue 2, February 2023, e13347.
- P. Hawkins, 2006. “Financial Access and Financial Stability.” Paper prepared for the Conference on Central Banks and the Challenge of Development. Bank for International Settlements, Basel, March 14–15.
- Pasali, S. S. (2013). Where is the cheese? Synthesizing a giant literature on causes and consequences of financial sector development. Synthesizing a Giant Literature on Causes and Consequences of Financial Sector Development (October 1, 2013). World Bank Policy Research Working Paper, (6655).
- Pesaran, M. H., Y. Shin and R. Smith (1998), "Pooled Mean group Estimation of Dynamic Heterogeneous Panels", Journal of American Statistical Association, 94.
- Raddatz C.,(2006).”Liquidity needs and vulnerability to financial underdevelopment”. J Financial Econ, 80:677-722.
- Rahimzadeh,Farzad,Shokouhifard,Siamak,Hazeri Niri,Hatef.(2022). The Effects of Corruption on Financial Inclusion (A System Generalized Method of Moments approach).Economic Modeling, 57,33-48 (In Persian).
- Rajan RG, Zingales L., (1998).”Financial dependence and growth”. Am Econ Rev, 88:559- 586.
- Rezaei, M., (2015). The effect of financial development on economic growth in Iran. The second international conference on management, economy and development, Tehran (In Persian).
- Samoui, A., Hassanvand, D., Khochiani, R. & Zahid Gharavi, M., (2019). Modeling financial inclusion and its threshold effects on the economic growth of OPEC member countries (threshold panel regression). Applied Economics, 10(32,33), 66-77 (In Persian).
- Saraswati, B. D, Maski, G, Kaluge, D & Sakti, R. K (2020). The effect of financial inclusion and financial technology on effectiveness of the Indonesian monetary policy, Business: Theory and Practice.
- Sethi, Dinabandhu & Debashis Acharya (2018). financial inclusion and economic growth linkage: some cross country evidence, Journal of financial Economic Policy
- Wang, R., & Luo, H., (2022), How does financial inclusion affect bank stability in emerging economies?, Emerging Markets Review, Volume 51, Part A, 100876.
- World Bank (2018). Global Financial Development Report