Exploring the complementary interaction between financial inclusion and gender equality on economic growth: fresh evidence from developing countries

Abstract

Financial inclusion and gender equality are the key constituents of the principle of “leaving no one behind” upheld by the Sustainable Development Goals, which emphasise a holistic approach for the sustainable development of all. Financial inclusion and gender equality are interrelated factors that can influence economic growth in complex ways. In addition to their independent impact on economic growth, there is an active interaction between the two which also plays an important role in determining the level of economic growth. This interaction has been neglected by the existing literature. Based on this gap, the paper investigates the existence and type of this interaction between financial inclusion and gender equality in determining economic growth for a group of 48 developing countries for the period 2004–2019 using the Generalised Method of Moments. The study found a complementary interaction between gender equality and financial inclusion, such that improvements in financial inclusion in the presence of better gender parity have a multiplicative effect on economic growth and vice versa. The study concludes that gender equality creates various pull and push factors for better financial inclusion. Similarly, financial inclusion eliminates gender inequality in access to financial products, exacerbating the influence on economic growth both individually and collectively.

Keywords

• Economic growth
• financial development
• gender inequality
• GMM
• interaction
• C23