All Rivers Run into Sea: How Inclusive Finance Affect Local Stability? A Global Empirical Perspective

Yufei Xie

doi:10.54097/hbem.v9i.9079

Authors

Yufei Xie

DOI:

https://doi.org/10.54097/hbem.v9i.9079

Keywords:

Inclusive Finance; Local Stability; GMM; Synthetic Control Methods.

Abstract

This study uses two-way fixed effect models to investigate the role of inclusive finance in enhancing local stability and apply generalized method of moments (GMM) estimations and synthetic control methods to overcome the endogeneity issue. Based on global terrorism index from 2011-2021, the empirical results show the following: (1) IF can significantly enhance local stability and has the greatest effect in middle-quantile countries. (2) The mechanism behind this effect is improving income equality and women participation and reducing poverty and unemployment rate through IF. In light of the findings, policy-makers can implement inclusive finance polices to achieve the goal of local stability. They should expand financial accessibility, take into account the significant opportunities for developing countries and the importance of equality across gender and income level.

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