Determinants of financial inclusion in South Asia: The moderating and mediating roles of internal conflict settlement

Financial inclusion is recognized as a key enabler of the 2030 Sustainable Development Goals agenda of the United Nations. Hence, this study investigates the impacts of internal conflicts, economic growth, information and communications technology, institutional quality, and remittance inflows on financial inclusion in selected South Asian countries. Notably, both the independent and moderating/mediating effects of internal conflict settlement on financial in-clusion are explored for the countries of concern. Overall, the results from the econometric analysis reveal that internal conflict resolution, higher mobile subscriptions, and lower levels of corruption improve financial inclusivity while higher economic growth inhibits financial inclu-sion in South Asia. Further, resolving internal conflicts is found to indirectly boost financial in-clusion by moderating the economic growth-financial inclusion nexus and mediating the remittance inflows-financial inclusion relationship. In line with these key findings, several financial inclusion-related policies are recommended to help promote financial inclusivity across South Asia.

Automated summary

This study examines the effects of internal conflicts, economic growth, information and communications technology, institutional quality, and remittance inflows on financial inclusion in selected South Asian countries. The results indicate that resolving internal conflicts, increasing mobile subscriptions, and reducing corruption can improve financial inclusivity in South Asia, while higher economic growth hinders financial inclusion. Additionally, resolving internal conflicts indirectly enhances financial inclusion by moderating the relationship between economic growth and financial inclusion, and mediating the relationship between remittance inflows and financial inclusion. Based on these findings, various financial inclusion-related policies are recommended to promote financial inclusivity across South Asia.