Thesis (PhD) - Cyprus International University. Institute of Graduate Studies and Research Accounting and Finance Department

Includes bibliography (sheets 176-217)

ABSTRACT Financial inclusion is a crucial part of the strategies aimed to achieve inclusive growth. In general, inclusive finance is fundamental and its ability to drive the socio-economic development, growth and sustainability in the economy. Access to finance and inclusion of citizenry has continue to be a top agenda discussions/items at both the country level and international forums. Despite this efforts, the interaction between economic development and growth, inequality, poverty and access to finance still remains puzzle. Financial inclusion has been recognized as a development policy priority and a key to economic growth in developing countries. In considering the significance of the same, this study empirically investigate the impact of financial inclusion on economic growth in Sub-Saharan African countries, which is sub-divided into low income, low middle income and upper middle income groupings to ascertain whether differences in income levels across countries affect the relative impact of finance on growth of the economy for the period between 2004 and 2019. The study employed annual data for 41 countries in the region and made use of an improved panel estimation of the generalized method of moment's (GMM) technique, to be precise the Arellano-Bover (1995)/Blundell-Bond (1998) dynamic panel estimation as to ensure the robustness of the findings. More so, to examine the causal relationship between the variables used, a Dumitrescu-Hurlin's (2012) heterogeneous panel causality test was employed. Based on the multidimensionality of the financial inclusion measures, a principal component analysis (PCA) was applied to develop a composite index for financial inclusion as a benchmark to measure the indicators of financial inclusion accurately (the penetration of financial institutions, the availability to financial services and the extent of usage of banking services). The results from the panel dynamic model show that financial inclusion index significantly has a positive effect on economic growth in SSA countries. Other findings indicate that there is the existence of a two-way (that is bidirectional) causal relationship between economic growth and financial inclusion. This implies that economic growth facilitates financial inclusiveness, therefore, policymakers should emphasize economic growth policies to foster access to quality and affordable financial services and products, to improve inclusive growth in the continent.