THE ROLE OF FINANCIAL INCLUSION IN THE ECONOMIC GROWTH: EVIDENCE FROM NANGARHAR AFGHANISTAN

Abstract

This article explores the relationship between the financial inclusion index and economic growth in Afghanistan, using annual data from 2009 to 2022. To ascertain the long-term relationship between these variables, the study utilized the Pedroni panel co-integration test and two co-integration regression methods: the Fully Modified Ordinary Least Square (FMOLS) and the Dynamic Ordinary Least Square (DOLS) methods. The Pedroni panel co-integration test confirms the existence of a long-term relationship between financial inclusion and economic growth. The coefficients of FMOLS and DOLS indicate that the financial inclusion index and selected control variables collectively support economic growth. Additionally, the Granger causality test confirmed a bi-directional causality between financial inclusion and economic growth.