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A Confidence-Financial Inclusion Nexus in the Caucasus and Central Asia?
Author:
Kalin I Tintchev
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https://orcid.org/0000-0001-6603-157X
and
Kady Keita https://isni.org/isni/0000000404811396 International Monetary Fund

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Series:
IMF Working Papers
Volume/Issue:
Volume 2024: Issue 257
Language:
English
Publication Date:
20 Dec 2024
DOI:
https://doi.org/10.5089/9798400292712.001
ISBN:
9798400292712
ISSN:
1018-5941
Pages:
26
Keywords:
Financial inclusion; confidence; governance; inflation targeting; fiscal rules; deposit insurance; inclusion Nexus; governance reform; CCA country; governance level; governance gap; Fiscal rules; Financial sector development; Global; Central Asia and the Caucasus
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We document novel evidence that confidence in macrofinancial stability has a positive impact on financial inclusion in CCA countries and more broadly. This channel is particularly important for CCA countries, with confidence gains of 1 unit leading to 0.7 unit improvement in financial inclusion. Institutional factors such as level of governance and reliance on transparent policy rules and robust financial safety nets explain a large fraction of the variability in confidence in the region. We find that governance reforms are critical for deepening financial inclusion while the impact of inflation targeting, fiscal rules and deposit insurance schemes is positive and material only when governance levels exceed certain thresholds.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund