Financial Innovation as a Catalyst or Constraint? A Panel Data Analysis of How Financial Literacy and Inclusion Influence Poverty and Growth in Africa
Akrofi Sarbeng-Adjebeng Kwaku
, Evans O. N. D. Ocansey , Felix Oppong Asamoah
Financial Innovation, Financial Inclusion, Financial Literacy, Economic Growth, Poverty, Sub-Saharan Africa, Fintech, Panel Data, GMM
This study investigates the role of financial innovation as a potential catalyst or constraint in the relationship between financial literacy, financial inclusion, poverty reduction, and economic growth in Sub-Saharan Africa (SSA). Against the backdrop of growing digitalization and persistent socio-economic disparities, the research examines whether financial innovation amplifies or undermines the developmental impact of financial access and knowledge. The primary objective is to assess the direct influence of financial literacy and financial inclusion on poverty and economic growth and to evaluate how financial innovation moderates these relationships. The study also aims to contribute to the limited body of empirical research using region-specific panel data to explore this intersection. To achieve these aims, the study employs a quantitative research design using panel data from 38 SSA countries spanning 2003 to 2023. A two-step System Generalized Method of Moments (GMM) estimator is used to address endogeneity, serial correlation, and unobserved heterogeneity. The findings reveal that both financial literacy and financial inclusion have strong and statistically significant effects on reducing poverty and promoting economic growth. Financial innovation also demonstrates a direct positive effect on both outcomes. However, its moderating influence is more nuanced: in some cases, innovation weakens the developmental impact of financial literacy and inclusion, particularly where institutional quality and digital infrastructure are lacking. This highlights the conditional nature of financial innovation’s role and the need for context-specific policies. These results carry important policy implications. Financial literacy and inclusion strategies should be expanded and embedded within broader national development frameworks. Meanwhile, financial innovation must be designed and regulated in ways that ensure it complements rather than replaces human capacity, equity, and accessibility. Overall, the study underscores the importance of integrated, inclusive financial development in fostering sustainable growth and reducing poverty in SSA.
"Financial Innovation as a Catalyst or Constraint? A Panel Data Analysis of How Financial Literacy and Inclusion Influence Poverty and Growth in Africa", JETNR - JOURNAL OF EMERGING TRENDS AND NOVEL RESEARCH (www.JETNR.org), ISSN:2984-9276, Vol.3, Issue 5, page no.394-438, May-2025, Available :https://rjpn.org/JETNR/papers/JETNRTH00008.pdf
Volume 3
Issue 5,
May-2025
Pages : 394-438
Paper Reg. ID: JETNR_231987
Published Paper Id: JETNRTH00008
Downloads: 000648
Research Area: Management All
Country: Nescastle Upon Tyne, Tyne and Wear, United Kingdom
ISSN: 2984-9276 | IMPACT FACTOR: 9.87 Calculated By Google Scholar | ESTD YEAR: 2023
An International Scholarly Open Access Journal, Peer-Reviewed, Refereed Journal Impact Factor 9.87 Calculate by Google Scholar and Semantic Scholar | AI-Powered Research Tool, Multidisciplinary, Monthly, Multilanguage Journal Indexing in All Major Database & Metadata, Citation Generator
Publisher: RJPN (IJPublication) Janvi Wave
