Financial Inclusion, Institutional Quality and Financial Development : Empirical Evidence from OIC Countries

This unique study examines the moderation effect on the relationship between financial inclusion, and institutional quality on the financial development of 45 Organization of Islamic Cooperation (OIC) countries. For empirical analysis, panel data is used for the period 2000 to 2016. We use the Arellano-Bond Generalized Method of Moments (GMM) and 2sls method in our estimations to draw multidimensional results. The empirical results confirm the significant positive relationship between the FII, IQI, and FDP. Interestingly, we find that institutional quality moderates the financial inclusion and has a significant positive impact on financial development. Our findings are robust to the use of FII, IQI, and FDP. Therefore, policymakers must sensibly understand the pivotal role of financial inclusion and institutional quality in establishing sustainable future development of OIC countries