Impact of Good Governance on Financial Inclusion in India: Evidence from the ARDL Bounds Testing Approach
Abstract
Purpose: Financial inclusion plays a crucial role in a country’s economic development. In India, the Reserve Bank of India has actively promoted financial inclusion since 2005. This study examined the impact of good governance on financial inclusion in India by analyzing data from 1996 to 2021 using the Autoregressive Distributed Lag (ARDL) model. Methodology: The study considered the Financial Inclusion Index as the dependent variable, while good governance indicators: Control of Corruption, Government Effectiveness, Political Stability, Regulatory Quality, Rule of Law and Voice and Accountability, were taken as independent variables. Additionally, GDP per capita, Foreign Direct Investment (FDI) and inflation were incorporated as control variables to ensure robust results. The ARDL model, which accommodates variables integrated at different orders, was used to examine both long-run and short-run relationships between financial inclusion and other variables.
Downloads
How to Cite
References
David Dickey, Wayne Fuller (1979) Distribution of the Estimators for Autoregressive Time Series with a Unit Root. 74(366a), 427-431.
Tarek Eldomiaty, Rasha Hammam, Rawan El Bakry (2020) Institutional determinants of financial inclusion: evidence from world economies. 19(2), 217-228.
R Goldsmith (1969) Financial structure and development.
Arindam Laha (2015) Association between Governance and Human Development in South Asia. 10, 254-273.
Sanjaya Lenka, Ruchi Sharma (2017) Does Financial Inclusion Spur Economic Growth in India?. 51(3), 215-228.
R Mckinnon (1973) Money and capital in economic development.
Joon Park (1992) Canonical Cointegrating Regressions. 60(1), 119.
Cyn-Young Park, Rogelio Mercado (2017) FINANCIAL INCLUSION, POVERTY, AND INCOME INEQUALITY. 63(01), 185-206.
M Pesaran, Yongcheol Shin, Richard Smith (2001) Bounds testing approaches to the analysis of level relationships. 16(3), 289-326.
Peter Phillips, Bruce Hansen (1990) Statistical Inference in Instrumental Variables Regression with I(1) Processes. 57(1), 99.
P Phillips, P Perron (1988) Testing for a unit root in time series regression. 75(2), 335-346.
C Rangarajan (2008) Report of the Committee on Financial Inclusion.
(2005) Annual Policy Statement for the year 2005-06.
M Sarma (2008) Index of Financial inclusion. 215.
Joseph Schumpeter (1911) The Theory of Economic Development.
Quanda Zhang, Alberto Posso (2017) Thinking Inside the Box: A Closer Look at Financial Inclusion and Household Income. 55(7), 1616-1631.
Published
2025-11-25
Issue
Section
License
Copyright (c) 2025 Authors and Global Journals Private Limited
This work is licensed under a Creative Commons Attribution 4.0 International License.