Abstract

Financial inclusion has been acclaimed to play a significant role in combating the three evils of poverty, unemployment and poverty, which have been a serious hindrance to the growth path of developing countries like Africa. It was against this that, this paper examined the drivers of financial inclusion in the top ten African economies in terms of gross domestic product growth rate. These include Angola, Algeria, Egypt, Kenya, Libya, Nigeria, Morocco, South Africa, Sudan and Tunisia. Covering a period of 2000 to 2015, using System generalized method of moment, which is considered superior to other panel data models due to its ability to address the problem of omission bias, endogeneity and autocorrelation. The data were obtained from World Development Indicators and Worldwide Governance Indicators which are being considered the most efficient sources of data, especially in developing countries. The study reveal that mobile banking, bank branches, political stability, interest rate, and inflation positively drive financial inclusion while income, access to Automated Teller Machine, and government expenditure have the negative impact on financial inclusion. On the bases of the above findings, it was concluded that mobile banking, bank branches, political stability, interest and inflation rate are the major determinants of financial inclusion in Africa. Based on the conclusion, the study recommends that appropriate financial sector policies and measures should be designed by the stakeholders in the financial system in form of low monetary policy rate to encourage access to financial services by all segment of the society. In addition to strict legislation, the can stop banks exploiting their customers through unnecessary bank charges and ensure the penetration of financial institutions into the rural areas. Fiscal and monetary policies should target an increase in the welfare of the masses especially the low-income earners in the society who are mostly excluded in Africa.

Keywords: Africa, employment, financial inclusion, fiscal policy, monetary policy, system GMM.

JEL Classification: O55, E24, G19, E62, E52, C34.

Cite as: Bakari, I. H., Idi, A., & Ibrahim, Y. (2018). Innovation determinants of financial inclusion in top ten African countries: a system GMM approach. Marketing and Management of Innovations, 4, 98-106. https://doi.org/10.21272/mmi.2018.4-09

This work is licensed under a Creative Commons Attribution 4.0 International License

References

1. Abel, S. Mutandwa. L. & Le Roux, P. (2018). A Review of the Determinants of Financial Inclusion. International Journal of Economics and Financial Issues, Vol.8(3), 1-8.
2. Adeyemi. A.A, Pramanik. A. H. (2012). A Measurment Model of the Determinants of Finacial Exclusion Among Mushing Micro-Entreprenuers in Ilorin Nigeria. Journal of Islamic Finance, Vol (1) 1, 030-043.
3. Ajide, K. B. (2017). Determinants of Financial Inclusion in African countries: Does Institutional Infrustructure Matters? CBN Journal of Applied Statistics, Vol.8(2), 34-45.
4. Akudugu, M. A. (2013). The Determinants of Financial Inclusion in Western Africa: Insights from Ghana. Research Journal of Finance and Accounting, Vol.4 (8), 23-35.
5. Allen, F. Demirguc-Kunt, A. Klapper, L. & Peria. M. S. M. (2018). The Foundation of Financial Inclusion: Understanding Ownership and Use of Accounts.New YORK: World Bank Development Research Group and Private Sector Development.
6. Anderson, T. W & Hsiao, C. (1981). Estimation of Dynamic Models with Error Components. American Journal of Statistical Association, Vol. 76, 598-606.
7. Bapat, D. & Biswa, N. B. (2018). Determinant of Financial Inclusion of Urban Poor in India: An Empirical Analysis. CESTITO Working Paper, 43-67.
8. Blundell, R. & Bond, S. (1998). Initial conditions and Moments Restrictions in Dynamic Panel Data Models. Journal of Econometrics, Vol. 87, 115-143.
9. Delechat, C. Newiak, M. Xu, R. Yang, F & Aslan, G. (2018). What is Driving Women Financial Inclusion Across Countries?New York: International Monetary Fund.
10. Evans, O. & Adeoye, B (2016). Determinants of Financial Inclusion in Africa: A Dynamic Panel Data Approach. University of Mauritius Reseach Journal, Vol (22)3.
11. Fairlie, R. W. (2005). An Extension of Blinder-Oaxaca Decomposition Technique to Logit and Probit Models. Journal of Economics and Social Measurement, Vol.30(4), 305-316.
12. Fawowe, B. (2017). Access to Finance and Firms Performance: Evidence from African Countries. Review of Development Finance, Vol.7(1), 6-17.
13. Gwalami, H. & Parkhi, S. (2014). Financial Inclusion Building a Sucess Model in the Indian Context. Procedia-Social and Behavioural Sciences, Vol. 133, 372-378.
14. Iqbal, B. A. & Sami, S. (2017). Role of Banks in Financial Inclusion in India. Coutaduriya Administration, Vol.62(3), 1-20.
15. Kim, D. Yu, J Hassan F. (2018). Financial Inclusion and Economic Growth in IOC countries. Research in International Business and Finance, Vol. 43, 1-14.
16. Kuri, P. K & Laha, A. (2017). Determinants of Financial Inclusion: A Study of some selected District of Western Bengal, India. ICSSR Major Research, Department of Economics, University of Western Bengal.
17. Leach, J. (2004). A Course in Public Economics.New Dhelhi: Cambridge University Press.
18. Leyshon, A. & Thrift, N. (1995). Geography of Financialm Exlusion, Financial Abandonmentin Britain Transaction. British Institute of Geogpy Journal, Vol. 20(3), 312-341.
19. Neaime, S. & Gaysset, I. (2018). Financial Inclusion and Stability in MENA: EVIDENCE FROM from Poverty and Inequality. Finance Research Letters, Vol.24, 230-237.
20. Ouma, S. Odongo, T. M. & Were, M. (2017). Mobile Financial Services and Financial Inclusion: Is it a Bomm for Savings Mobilization? Review of Development Finance, Vol.7(1), 29-35.
21. Oyelami, L. Saibu, O.M &Adekunle, B. S. (2017). Determinants of Financial Inclusion in Sub-Saharan African Countries. Conenant Journal of Business and Social Science, Vol.8(2), 19-35.
22. Rajasekaran, N. (2017). Including the Excluded: The Scenerio of Financial Inclusion in India. Journal of Business and Management, Vol.20(2), 64-69.
23. Rajput, B. (2017). Financial Inclusion and its Determinants: An Empirical Study on the inter State Variasion in India International journal on Arts Managements and Humanities, Vol.6(1), 8-18.
24. Rao, K. S. & Baza, A. U. (2017). Barriers to Access to and Usage of Financial Services in Ethopia. Business and Economic Reseach, Vol. 7(1), 139-148.
25. Sahoo, A. K. (2017). Determinants of Financial Inclusion in Tribal Districts of Odisha: An Empirical Investigation. Social Change, Vol. 47(1), 1-20.
26. Sharma, A. T. Pradhan, B. B. & Sahu, N. C. (2013). An Analytical Study of the Relevance of Financial Inclusionfor Developing Nations. Research Inventry, International Journal of Engineering and Science, Vol. (2) 6, 15-20.
27. Singh, P. Sikdar, S & Chaturvedi, A. (2017). Determinants of Financial Inclusion Evidence from India. Asian Journal of Research in Banking and FinanceVol.7(12), 67-86.
28. Soumare, I. Tchana, F. & Kengne, T. M. (2016). Analysis of the Determinants of Financial Inclusion in Central and Western Africa. Rransnational Corporation Review, 35-48.
29. Tambunlertchai, K. (2018). Determinants of Barriers to Financial Inclusion in Myanmar: What Determine Access to Financial Services and What Hinders it? The Singapore Economic Review, Vol.3(6), 1-18.
30. Tita, A. F. & Aziakpono, M. J. (2017). The Effect of Financial Inclusion on Welfare in Sub-Saharan Africa: Evidence from Disaggregated Data. Johaniburg: National Treasury bof South Africa.
31. Triki, T. & Faye, I. (2013). Financial Inclusion in Africa.Tunisia: African Development Bank Group.
32. Varian, H. R. (2010). Intermediate MicroEconomics, Mordern Approch.New York City: Norton & Company.
33. Wale. L. E & Makina, D. (2017). Account Ownership and Use of Financial Services among some SelectedSub-Saharan African Countries. African Journal of Economic and Business Studies, Vol.8(1), 19-35.
34. Yakubu, I. Dinye, R & Idrisu, W. A. (2017). Discriminant Analysis of Demand Side Road Blocks to Financial Inclusion in Northern Ghana. Journal of Mathematical Finance, Vol.7(1), 718-733.
35. World Bank (2014). Financial Inclusion, Global Financial Development Report. Wasington: World Bank Group.
36. World Bank (2017) World Bank Development Indicators. http://www.data.worldbank.org.
37. World Governance Indicators (2017) World Wide Governance Indicators. http://www.worldwidegovernanceindicators.org. 
38. Zins, A. & Weill, L. (2016). The Determinants of Financial Inclusion in Africa. Review of Development Finance, Vol.6(1), 46-57.
39. Zuzana, F. & Weill. L. (2014). Understanding Financial Inclusion in China: Bank of Financial Institutions in Transition Economy. Discussion Journal, 34-54.