Economic Integration and Financial Inclusion: Evidence from Middle-Income Countries

Vuong, Ngoc Bao; Suzuki, Yoshihisa

doi:.0.0.0

Ngoc Bao Vuong, Yoshihisa Suzuki,

Graduate School of Humanities and Social Sciences, Hiroshima University, Hiroshima, Japan

Corresponding Author: Ngoc Bao Vuong ,Email: vbngoc139@gmail.com

ABSTRACT

The study examines the impact of economic integration on financial inclusion, focusing on thirty-two middle-income countries worldwide from 2006 to 2018. Using the coefficient of variance's weighting methodology, we construct a composite financial inclusion index from six underlying indicators. Meanwhile, economic integration indices at both global and regional levels are created based on the combination of trade and financial openness indicators. The empirical results confirm a positive relationship between economic integration and financial inclusion, with global integration exposing a stronger impact than regional one. Our finding still holds when we divide the sample into three subregions as well as when several robustness checks are performed.

JEL Classification

F36: Financial Aspects of Economic Integration
F60: General

Keywords: financial inclusion | economic integration | middle-income countries