Exploring the complementary interaction between financial inclusion and gender equality on economic growth : fresh evidence from developing countries

Financial inclusion and gender equality are the key constituents of the principle of “leaving no one behind” upheld by the Sustainable Development Goals, which emphasise a holistic approach for the sustainable development of all. Financial inclusion and gender equality are interrelated factors that can influence economic growth in complex ways. In addition to their independent impact on economic growth, there is an active interaction between the two which also plays an important role in determining the level of economic growth. This interaction has been neglected by the existing literature. Based on this gap, the paper investigates the existence and type of this interaction between financial inclusion and gender equality in determining economic growth for a group of 48 developing countries for the period 2004–2019 using the Generalised Method of Moments. The study found a complementary interaction between gender equality and financial inclusion, such that improvements in financial inclusion in the presence of better gender parity have a multiplicative effect on economic growth and vice versa. The study concludes that gender equality creates various pull and push factors for better financial inclusion. Similarly, financial inclusion eliminates gender inequality in access to financial products, exacerbating the influence on economic growth both individually and collectively. This study looks at the complementary role of financial inclusion and gender equality in promoting economic growth in developing countries. The study employs a panel data analysis of 48 countries from 2004 to 2019 using the Generalized Method of Moments to find a substantial complimentary relationship between financial inclusion and gender equality. The findings show that innovations in financial inclusion, combined with greater gender equality, have a multiplier effect on economic development. This study emphasizes the need to increase financial inclusion and gender equality as interconnected methods for achieving sustainable economic growth. The policy implications are considerable, implying that attempts to increase financial inclusion should be complemented by actions to improve gender equality, assuring inclusive and equitable economic growth. This work adds to the current literature by addressing a previously overlooked interaction, providing new perspectives for policymakers, economists, and development practitioners working to promote economic development in developing countries.