Title: Furthering inclusive banks and inclusive capital markets: emerging markets' perspective

Authors: Josephine Ofosu-Mensah Ababio; Kofi A. Osei; Godfred Alufar Bokpin; Eric Osei-Assibey

Addresses: Department of Finance, University of Ghana Business School, University of Ghana, Accra, Ghana ' Department of Finance, University of Ghana Business School, University of Ghana, Accra, Ghana ' Department of Finance, University of Ghana Business School, University of Ghana, Accra, Ghana ' Department of Economics, University of Ghana, Accra, Ghana

Abstract: This paper examines how increased financial inclusion fosters an inclusive banking sector and capital market, and whether they in turn promote more financial inclusion in emerging markets. The System-GMM technique and Panel Granger Causality Test were employed for the analyses. The paper provides empirical evidence that financial inclusion enhances the banking sector, the bond and stock markets inclusiveness. Besides, the Panel Granger Test results show a uni-causality linkage for banks and the stock market, while it confirmed a bi-causality linkage between banks and the bond market in emerging markets. It concludes that increased financial inclusion promotes inclusive banks and capital markets, but the reverse does not apply to the stock market. The findings imply that greater financial inclusion is needed in building inclusive banks and capital markets in emerging markets. Their policy-makers must not ignore the large local population and enterprises when mobilising savings, capital resources and allocating credit facilities.

Keywords: increased financial inclusion; inclusive well-functioning banking sector; inclusive well-developed capital market; system-GMM; emerging markets.

DOI: 10.1504/IJFSM.2018.093867

International Journal of Financial Services Management, 2018 Vol.9 No.3, pp.255 - 287

Accepted: 05 Apr 2018
Published online: 07 Aug 2018 *

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