The Effects of Economic and Financial Development on Financial Inclusion in Africa


  • Olaniyi Evans Department of Economics, University of Lagos, Akoka, Lagos, Nigeria



Financial inclusion; financial development; economic development; panel FMOLS


This study provides empirical evidence on the effects of economic and
financial development on financial inclusion in Africa, using panel FMOLS
for the 2005-2014 period. The study shows that economic growth has a
significant positive impact on financial inclusion, meaning that African
countries with higher economic growth have more inclusive financial
systems. GDP per capita has a significant positive impact on financial
inclusion. That is, income is an important factor in explaining the level of
financial inclusion in Africa. It is, as well, established in this study, that
although both economic and financial development promote financial
inclusion, though the effects of economic development are much stronger.
Also, inflation is negatively linked to financial inclusion, and as well
insignificant across all specifications. Deposit interest rate is positively
linked to financial inclusion, though insignificant. The low deposit interest
rates in African countries do not encourage inclusive financial systems.
Population, though positive, is insignificant. Internet has positive
significant impact on financial inclusion, meaning that internet access is
indispensable in a fast-moving and digital African economy. Literacy is
also statistically significant, meaning that adult literacy is an important
factor in explaining the level of financial inclusion in Africa. As well,
Islamic banking presence and activity are associated with higher financial


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How to Cite

Olaniyi Evans. (2020). The Effects of Economic and Financial Development on Financial Inclusion in Africa. Review of Economics and Development Studies, 1(1), 21-32.