FINANCIAL INCLUSION AND ECONOMIC GROWTH: EVIDENCE FROM EMERGING ECONOMIES

Abstract

This study examines the impact of financial inclusion on economic growth using panel data from selected emerging economies (BRICS) over the period 2012–2024. Financial inclusion is proxied by bank branches and ATMs, and by domestic credit to the private sector, while economic growth is measured by the logarithm of GDP per capita. Using panel econometric techniques, including pooled OLS, Fixed Effects, and Random Effects models, the study identifies the most appropriate specification through the Hausman test. The results indicate that the Random Effects model is suitable. Empirical findings reveal that private credit significantly promotes economic growth, whereas bank branches and ATMs are statistically insignificant. Inflation and trade openness are found to negatively affect growth. Diagnostic tests confirm the presence of panel effects, suggesting the need for robust estimation. The study concludes that improving credit access and strengthening financial systems are essential for achieving sustainable economic growth.