Article Sidebar

Submitted
August 13, 2020
Accepted
October 20, 2020
Published
October 30, 2020
Download
PDF
Statistic
Read Counter : 985 Download : 1248

Downloads

Download data is not yet available.

Main Article Content

Abstract

This paper examines the effect of the globalization threshold on financial inclusion in 40 selected countries during 2000-2018. A principal component analysis (PCA) and a static panel threshold (SPT) are utilized. There are three dimensions and one aggregation of financial inclusion indicators assessed by PCA, while the globalization threshold is estimated under static panel threshold regression. Findings/Originality: The findings exhibit six countries with strong financial inclusion and eight countries with weak financial inclusion during study periods. Furthermore, the threshold effect of globalization has a significant impact on the financial inclusion index. The robustness checking employs panel cointegration test exhibits that inequality and some institutions indicators have a significant impact on financial inclusion both in the short-run and long-run. The policy implication suggests that governments should increase the financial inclusion index level during the globalization period, decrease inequality, and improve institutions' quality.

Keywords

Financial inclusion Globalisation Income inequality Institutions Threshold effect

Article Details

License

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).

Creative Commons License

Economic Journal of Emerging Markets by Center for Economic Studies, Universitas Islam Indonesia is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Author Biography

Malik Cahyadin, Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta, Indonesia

Economics
How to Cite
Cahyadin, M. (2020). The linkage between globalisation and financial inclusion: Do inequality and institutions matter?. Economic Journal of Emerging Markets, 12(2), 220–233. https://doi.org/10.20885/ejem.vol12.iss2.art8
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Aginta, H., Soraya, D., & Santoso, W. (2018). Financial development and income inequality in Indonesia: A sub-national level analysis. Economics and Finance in Indonesia, 64(2), 111–130.
  2. Arora, R. U. (2010). Measuring financial access. Griffith Business School Discussion Papers Economics, 7.
  3. Baiardi, D., & Morana, C. (2018). Financial development and income distribution inequality in the euro area. Economic Modelling, 70, 40–55. https://doi.org/10.1016/j.econmod.2017.10.008
  4. Barajas, M. A., Beck, T., Dabla-Norris, M. E., & Yousefi, M. R. (2013). Too cold, too hot, or just right? Assessing financial sector development across the globe. International Monetary Fund.
  5. Dahiya, S., & Kumar, M. (2020). Linkage between financial inclusion and economic growth: An empirical study of the emerging Indian economy. Vision: The Journal of Business Perspective, 24(2), 184–193. https://doi.org/10.1177/0972262920923891
  6. Delechat, M. C. C., Newiak, M. M., Xu, R., Yang, M. F., & Aslan, G. (2018). What is driving women’s financial inclusion across countries? International Monetary Fund Working Paper No. 18/38.
  7. Dymski, G. A. (2005). Financial globalization, social exclusion and financial crisis. International Review of Applied Economics, 19(4), 439–457. https://doi.org/10.1080/02692170500213319
  8. Gupte, R., Venkataramani, B., & Gupta, D. (2012). Computation of financial inclusion index for India. Procedia - Social and Behavioral Sciences, 37, 133–149. https://doi.org/10.1016/j.sbspro.2012.03.281
  9. Gygli, S., Haelg, F., Potrafke, N., & Sturm, J.-E. (2019). The KOF globalisation index–revisited. The Review of International Organizations, 14(3), 543–574.
  10. Hansen, B. E. (1999). Threshold effects in non-dynamic panels: Estimation, testing, and inference. Journal of Econometrics, 93(2), 345–368. https://doi.org/10.1016/S0304-4076(99)00025-1
  11. Kaufmann, D., Kraay, A., & Mastruzzi, M. (2010). The worldwide governance indicators: A summary of methodology. Data and Analytical Issues, World Bank Policy Research Working Paper, 5430.
  12. Kim, J.-H. (2015). A study on the effect of financial inclusion on the relationship between income inequality and economic growth. Emerging Markets Finance and Trade, 52(2), 498–512. https://doi.org/10.1080/1540496x.2016.1110467
  13. Lenka, S. K., & Barik, R. (2018). A discourse analysis of financial inclusion: Post-liberalization mapping in rural and urban India. Journal of Financial Economic Policy, 10(3), 406–425. https://doi.org/10.1108/jfep-11-2015-0065
  14. Melecky, M., & Podpiera, A. M. (2020). Financial sector strategies and financial sector outcomes: Do the strategies perform? Economic Systems. https://doi.org/10.1016/j.ecosys.2020.100757
  15. Nasreen, S., Mahalik, M. K., Shahbaz, M., & Abbas, Q. (2020). How do financial globalization, institutions and economic growth impact financial sector development in European countries? Research in International Business and Finance. https://doi.org/10.1016/j.ribaf.2020.101247
  16. Park, C.-Y., & Mercado Jr., R. V. (2015). Financial inclusion, poverty, and income inequality in developing Asia. Asian Development Bank.
  17. Pedroni, P. (2000). Fully modified OLS for heterogeneous cointegrated panels. In Advances in Econometrics (Vol. 15, pp. 93–130). Emerald (MCB UP ). https://doi.org/10.1016/S0731-9053(00)15004-2
  18. Pedroni, P. (2001). Purchasing Power Parity Tests in Cointegrated Panels. Review of Economics and Statistics, 83(4), 727–731. https://doi.org/10.1162/003465301753237803
  19. Pesaran, M. H., Shin, Y., & Smith, R. P. (1999). Pooled Mean Group Estimation of Dynamic Heterogeneous Panels. Journal of the American Statistical Association, 94(446), 621–634. https://doi.org/10.1080/01621459.1999.10474156
  20. Pesaran, M. H., & Smith, R. (1995). Estimating long-run relationships from dynamic heterogeneous panels. Journal of Econometrics, 68(1), 79–113. https://doi.org/10.1016/0304-4076(94)01644-F
  21. Sanjaya, I. M., & Nursechafia, N. (2016). Financial inclusion and inclusive growth: A cross-province analysis in Indonesia. Buletin Ekonomi Moneter Dan Perbankan, 18(3), 281–306.
  22. Sarma, M. (2008). Index of financial inclusion (No. 22259; Finance Working Papers). East Asian Bureau of Economic Research.
  23. Sarma, M. (2012). Index of financial inclusion—A measure of financial sector inclusiveness. Berlin Working Papers on Money, Finance, Trade and Development No. 07/2012.
  24. Sethi, D., & Acharya, D. (2018). Financial inclusion and economic growth linkage: Some cross country evidence. Journal of Financial Economic Policy, 10(3), 369–385. https://doi.org/10.1108/jfep-11-2016-0073
  25. Sethy, S. K. (2016). Developing a financial inclusion index and inclusive growth in India. Theoretical and Applied Economics, 23(2), 187–206.
  26. The World Bank. (2017). Global Findex database report 2017. World Bank Publications.
  27. Xu, X. (2019). Trust and financial inclusion: A cross-country study. Finance Research Letters. https://doi.org/10.1016/j.frl.2019.101310
  28. Yorulmaz, R. (2018). An analysis of constructing global financial inclusion indices. Borsa Istanbul Review, 18(3), 248–258. https://doi.org/10.1016/j.bir.2018.05.001
No Related Submission Found