Determinants of financial inclusion in South Asia: The moderating and mediating roles of internal conflict settlement

Financial inclusion is recognized as a key enabler of the 2030 Sustainable Development Goals agenda of the United Nations. Hence, this study investigates the impacts of internal conflicts, economic growth, information and communications technology, institutional quality, and remittance inflows on financial inclusion in selected South Asian countries. Notably, both the independent and moderating/mediating effects of internal conflict settlement on financial inclusion are explored for the countries of concern. Overall, the results from the econometric analysis reveal that internal conflict resolution, higher mobile subscriptions, and lower levels of corruption improve financial inclusivity while higher economic growth inhibits financial inclusion in South Asia. Further, resolving internal conflicts is found to indirectly boost financial inclusion by moderating the economic growth-financial inclusion nexus and mediating the remittance inflows-financial inclusion relationship. In line with these key findings, several financial inclusion-related policies are recommended to help promote financial inclusivity across South Asia.