Does financial inclusion catalyze trade

Abstract

This study scrutinizes the effect of financial inclusion (FI) on trade by employing the Newey West standard approach, Feasible Generalized Least Square (FGLS), Pooled Ordinary Least Square (POLS) regression, Fixed Effect Model (FEM) and Random Effect Model (REM) on 24 developing economies from 2004 to 2020. Results found strong, significant and positive association linking FI and trade. Policy recommendations are developing countries should take serious measures to deepen FI which will boost the effect on trade. Furthermore, these economies should expand trade in new markets and use formal financial institutions as channels for carrying out trade transactions.