Financial Inclusion and Its Role in Influencing Certain Macroeconomic Variables: a Case Study (Jordan, Iraq)

Abstract

   Given that the concept of financial inclusion reflects the ability of individuals and economic units, across all income groups, to access a wide range of diverse, innovative and high-quality financial services with ease and at low, competitive prices, whilst protecting their rights and helping them to manage their funds and savings efficiently and effectively, its dimensions and indicators have, over the past few years— and particularly following the recent global financial crisis—garnered widespread attention from both developing and developed countries, and the international community, through the G20 (20), the International Monetary Fund and the World Bank Group have played a major and effective role in developing and collecting data on financial inclusion, using and innovating the best methods to improve its levels, based on its great importance in fueling consumption and raising economic growth rates, as well as its contribution to achieving high levels of financial stability. International reports indicate a significant disparity between financial inclusion rates in developing countries and their counterparts in developed countries; in developing countries, this rate has not exceeded 30% at best, which suggests that the rate of financial exclusion in these countries exceeds 70%. Arab countries, as part of the developing world, are no exception to this (with the exception of the Gulf Cooperation Council countries). This makes the assessment of the financial inclusion index in these countries, and the measurement and analysis of its impact on certain macroeconomic variables, an important and effective tool for financial and monetary decision-makers when formulating their future policies.