Financial Inclusion and Output Volatility: An Empirical Investigation


A money exchanger counts Somali shilling notes on the streets of the Somali capital Mogadishu.


Achieving greater financial inclusion remains a key policy priority for several emerging markets and developing economies (EMDEs). While the related literature has recognized that expanding financial services provision has the potential to promote equitable economic growth, not much attention has been paid to the relationship between financial inclusion and macroeconomic volatility. To what extent does financial inclusion mitigate or amplify macroeconomic volatility in EMDEs across heterogeneous levels of economic development? Output volatility is a central concern for policymakers in several EMDEs specifically to insulate the economy from exogenous shocks or to smooth aggregate fluctuations. Given this context, this paper examines the impact of financial inclusion on output volatility, for a large panel of 103 EMDEs from 1995 to 2013. We also probe the possible existence of non-linearities governing the relationship between financial inclusion and output volatility.

About the Speaker 

Sasidaran Gopalan is a Research Fellow at the Asia Competitiveness Institute, Lee Kuan Yew School of Public Policy, National University of Singapore. He graduated with a PhD in Public Policy (specializing in international finance and development) at the School of Public Policy (now renamed Schar School of Policy and Government), George Mason University, USA. He obtained his Bachelors and Masters’ degrees in Economics from Loyola College (Chennai) and Madras School of Economics (Chennai), respectively. Dr. Gopalan has extensively published in the areas of international finance and development policy. His scholarly publications include three books (two co-authored and one co-edited) with leading publishing houses including Oxford University Press and Palgrave-Macmillan as well as several academic articles in refereed international journals including top-tier field journals such as World Development and Journal of Macroeconomics. He has also contributed to book chapters in edited volumes, policy briefs as well as op-eds for leading global financial dailies. Dr. Gopalan’s research interests span the broad fields of international finance and development policy. Specific topics include an empirical analysis of financial openness and international capital flows, financial development, financial inclusion and foreign aid. His research has a heavy empirical and policy flavour.


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