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        INCLUSIVE FINANCE, GROWTH AND SOCIO-ECONOMIC DEVELOPMENT IN SAUDI ARABIA: A THRESHOLD COINTEGRATION APPROACH

        SALEM HATHROUBI 중앙대학교 경제연구소 2019 Journal of Economic Development Vol.44 No.2

        Empirical literature argues that financial inclusion has positive impact on growth, reduce inequality and poverty. This paper has twofold. First, it aims to provide a measurement of financial inclusion in the Kingdom of Saudi Arabia (KSA) as an oil-rich economy during the period 1980-2016 by the construction of a comprehensive index. Second, we study the incidence of financial inclusion on growth and human development through a set of socioeconomic leading variables. Using GMM methodology, our results suggest that financial inclusion is highly and positively correlated to human development index, and to employed share of adult population. Conversely, financial inclusion is insignificantly negatively correlated to per capita real GDP and highly negatively correlated to the share of rural population and to the share of women in adult population. In this study we take in consideration the non-linearity between inclusive finance, economic growth and human development by performing threshold cointegration and Granger-causality tests. Our findings show that there is non-linear causal relationship between financial inclusion, human development and economic growth in the long-run while in the short-run neither financial inclusion nor economic growth Granger-causes each other. This result is in concordance with previous empirical studies in the case of oil-based economies. Our findings could help policy-makers and regulators in KSA to design an inclusive financial sector taking into account the specificities of the Saudi economy.

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