Does Financial Inclusion and Human Development Progress Sustainably? Evidence from Emerging Countries

Despite the big strides taken by the countries on economic growth due to globalization from the last decade of the twenty-first century, lack of financial inclusion, illiteracy and poor health conditions continue to hinder the social development of many countries. At the turn of the current decade, countries are looking at ways to meet the 2030 deadline set for SDGs. This study will guide policy makers to make strategic choices related to their investment in health and education to improve social development sustainably leading to better and sustained financial inclusion. Data related to 18 emerging countries (as given in MSCI report) for the time 2004 to 2018 was retrieved and Fixed Effect Panel Quantile (FPQR) was employed to study the nexus of human development (education, health), financial inclusion and carbon emissions. Each of the constructs related to financial inclusion, human development, health, and education were defined by appropriate variable for which data was available for the 15-year period. Findings of the study include, (i) Income and education have a favorable impact on the FI, but health and CO2 have a negative impact. (ii) Education, GDP, and CO2 have a favorable influence on the health index and a negative impact on FI. (iii) FI, health, and CO2 have positive effects on education but negative effects on GDP. (iv) GDP, education, and health all have a negative impact on CO2 emissions. This study emphasizes the means to achieve financial inclusion through sustained human development through education and health. The effect of environmental degradation caused by economic progression is also considered to give a sustainable model. Emerging economies focusing on improving the FI and HD can have policy ramifications to boost the education level of its citizens as well as increase the access to healthcare services for them. A financially and digitally literate society will improve its score on the human development index.

Automated summary

Despite economic growth driven by globalization, social development of many countries is hindered by lack of financial inclusion, illiteracy, and poor health conditions. This study examines the nexus of human development, financial inclusion, and carbon emissions to guide policy makers in making strategic choices for sustainable social development.