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There is no consensus on the key drivers of financial inclusion due to variation in the socioeconomic features of countries, use of indicators and research methods. The main objective of this study is, therefore, to empirically examine the key drivers of financial inclusion across 26 selected Sub-Saharan African (SSA) economies for the period between 2000 and 2019, using a system generalized method of moments (GMM). A principal component analysis (PCA) is applied to construct a composite index of financial inclusion to address the multi-dimensional nature of the variable. The findings of the study indicate that both the macroeconomic and microeconomic factors influence the level of financial inclusion of the SSA countries. Specifically, the lag effect, economic growth, financial stability, inflation, financial deepening, liquidity, profitability, and bank efficiency are important drivers of financial inclusion in the SSA region. It is therefore important for policy makers and regulators to consider these factors while developing policies and strategies that foster access to financial products and services and ensure financial inclusion in the region. [ABSTRACT FROM AUTHOR]

Many earlier development finance studies have attempted to assess the relationship between financial inclusion and economic growth. However, the findings of these studies vary from economy to economy and region to region due to various social and economic factors. We, therefore, deemed it pertinent to examine the relationship between financial inclusion and economic growth while further identifying the direction of causality between the two variables in twenty-six (26) Sub-Saharan African (SSA) economies using annual secondary data over the 2000–2019 period. In our paper, we used the principal component analysis (PCA) technique to develop a single composite index to proxy financial inclusion while adopting panel unit root, system generalised method of moment (GMM), and ARDL cointegration tests to assess the stationarity properties, assess the factors that affect economic growth, and examine the long-run relationships between financial inclusion and economic growth, respectively. In addition, a Granger non-causality test is used to verify the direction and magnitude of causality. Our study revealed that financial inclusion and economic growth share a strong long-run relationship and that there is bi-directional causality, indicating synergy between these two variables. In order to ensure sustainable economic growth, we thus recommend that developing countries develop macroeconomic policies that will promote financial inclusion while enhancing the functioning and regulation of the domestic financial markets to ensure that all citizens are catered for in the available instruments, products, and service offerings. Within the same policy framework, efforts must be made to further support productive sectors of the economy to ensure economic growth. [ABSTRACT FROM AUTHOR]

Several factors determine the stability of a financial system. The main objective of this study is, thus, to empirically examine the key drivers of financial stability in the Sub-Saharan African (SSA) economies for the period of 2000 to 2019 using a dynamic panel Generalised Method of Moments (GMM). As financial inclusion and institutional quality broadly comprise of multiple individual measures, we constructed a composite index to proxy and represent each variable, respectively, which was then used later in the regression model to assess their effect on financial stability in the sampled economies. The findings of the study indicated that the lag effect and financial inclusion are the major positive drivers of financial stability in the SSA economies. Institutional quality, financial technology adoption and global financial crises also reflected a negative impact on the stability of a financial system in the region. Other variables seem to have no impact in the region. These findings underpin the need for policy makers and regulators to formulate and adopt macroeconomic policies that include more people in the financial system and markets, so that risks are spread over a greater populous, thereby sustaining financial stability. In addition, our scholarly contribution is that we highlight the possibilities of a trade-off between financial regulation, inclusion and digitalisation versus financial stability, which is an underresearched phenomena in financial studies. [ABSTRACT FROM AUTHOR]