eterogeneous Effects of Financial Inclusion on Economic Growth Across Income Groups in Sub-Saharan Africa

Abstract

 Background: The importance of financial inclusion has become a major topic in the literature of sustainable economic growth and development especially in some regions like in the SSA countries. Financial inclusion is considered as an accessibility of affordable financial products and services to individuals and companies as well as the use of the financial products and services to integrate into the formal financial systems Objectives: The purpose of this paper is to analyze the role of financial “inclusion on the growth in the SSA region over the panel period of 2004-2024. Methods:  A System GMM is used to analyze the relationship in question which addresses the endogeneity and the dynamic impacts in Sub-Saharan African countries that includes Low-Income countries, Lower-Middle-Income countries and Upper-Middle-Income countries Results: The findings indicate that financial inclusion has a positive but statistically insignificant impact on economic growth in LIC (0.006) and LMIC (0.017), while it shows a negative and statistically insignificant effect in UMIC (-0.041). Investment contributes positively to growth in LIC (0.037) and LMIC (0.114), but negatively in UMIC (-0.033). Good governance positively influences growth in LIC (0.051) and UMIC (0.132). In the long run, financial inclusion demonstrates a stronger and more significant role, particularly in UMIC (0.772), suggesting that its effects materialize over time Conclusion: Overall, the study finds that financial inclusion promotes economic growth more effectively when complemented by good governance, investment, and human capital, highlighting the importance of a supportive institutional and economic environment.