Financial Inclusion and Macroeconomic Stability: Case of the MENA Zone

  • Badr Moulouade Faculty of Law, Economics and Social Sciences Agdal, Mohammed V University of Rabat, Morocco
  • Halima Jamil Faculty of Law, Economics and Social Sciences Agdal, Mohammed V University of Rabat, Morocco
Keywords: Financial Inclusion, Financial Stability, Inflation, Economic Growth, VAR panel

Abstract

Although financial inclusion has been of great concern to policymakers in the MENA region, its promotion poses major challenges for macroeconomic stability. Recent work studying financial inclusion in the MENA region has highlighted the importance of investigating the relationship between financial inclusion and key indicators of macroeconomic stability.

In this research, we try to study the possible links between financial inclusion measured by the growth in the number of commercial bank branches (per 100,000 adults) and the number of Automated teller machines (per 100,000 adults) and indicators of macroeconomic stability, including the consumer price index, GDP per capita and the probability of banking system default. To do this, we estimate a Panel VAR model on a sample of 9 MENA zone countries over the period 2005-2016. Our work was based on the Granger test, impulse responses, variance decomposition and robustness test.

Our results indicate the existence of causality between the variable of financial inclusion and the variables of inflation, economic growth and financial stability. We show that financial inclusion reduces the probability of default of the banking system and negatively impacts price stability and economic growth. Thus, the implications of our results in terms of economic policies will be oriented, on the one hand, towards increasing the bancarization rate so as to improve access to financial services in the MENA region and, on the other hand, towards economic policies aimed at maintaining price stability.

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Published
2021-05-30
How to Cite
Moulouade, B., & Jamil, H. (2021). Financial Inclusion and Macroeconomic Stability: Case of the MENA Zone. International Journal of Accounting, Finance, Auditing, Management and Economics, 2(3), 375-389. https://doi.org/10.5281/zenodo.4869584
Section
Articles