Financial Accessibility and Economic Growth-Evidence from SAARC Countries

This paper investigates the empirical evidence on the relationship between financial accessibility and development in a nation. The primary objective was to test the conventional hypothesis which states that improved financial accessibility leads to financial development and economic growth. Initially, a dynamic panel model on the relationship between financial accessibility and economic growth was built with a set of controlled variables. Several financial access indicators from South Asian low and middle income economies were used for analysis. The study period was from 2007 to 2015, applying the Generalized Method of Moments (GMM) estimators to estimate their relationship. From these estimations, it was found that high financial accessibility leads to high income in general. In addition, it was found that an increase in financial access indicators had a greater impact on economic growth in low-income countries than it did on economic growth in middle-income countries