Is financial inclusion good for bank stability? International evidence

By M. Ahamed, Sushanta Mallick. Journal of Economic Behavior and Organization, 2017

509 citations recorded by the source corpus.

Abstract Financial inclusion has become an important public policy priority following the recent global financial crisis. Yet, we know very little of how it impacts soundness of the providers of financial services. Using an international sample of 2635 banks in 86 countries over the period 2004–12, we find that higher level of financial inclusion contributes to greater bank stability. The positive association is particularly pronounced with those banks that have higher customer deposit funding share and lower marginal costs of providing banking services; and also with those that operate in countries with stronger institutional quality. The results are robust to instrumental variables analysis, controlling for bank fixed effects, alternative measures of financial inclusion, among several other robustness tests. Our results highlight that the importance of ensuring inclusive financial system is not only a development goal but also an issue that should be prioritised by banks, as such a policy drive is good for their stability.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/12d44150b599ca902aae96866884270ca5c5c6e9

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Kusuma Ratnawati
2. Shirley J. Ho
3. Roman Matousek
4. M. Ahamed
5. Sushanta Mallick

In Economics and Econometrics

1. Kusuma Ratnawati
2. Roman Matousek
3. Shirley J. Ho
4. M. Ahamed
5. Sushanta Mallick

In Finance

1. Kusuma Ratnawati
2. Roman Matousek
3. Shirley J. Ho
4. M. Ahamed
5. Sushanta Mallick

Citations in the corpus

• The Impact of Financial Inclusion on Economic Growth, Poverty, Income Inequality, and Financial Stability in Asia (2020, background): “Hanning and Jansen (2010), Prasad (2010), Morgan and Pontines (2014), Dienillah and Anggraeni (2016), Ozili (2018), Neaime and Gaysse (2018), and Ahamed and Mallick (2019) found that financial inclusion positively influences financial stability. Sanusi (2011) argues that there is no economy that can”
• Inclusive banking, financial regulation and bank performance: Cross-country evidence (2021, methodology): “Following Ahamed and Mallick (2017), we use these two dimensions to”