The Role of Mobile Financial Services (MFSs) on Financial Inclusions and Economic Growth of Bangladesh

Mobile Financial Services (MFSs) on Financial Inclusions

Abstract

Bringing non-banking people into the banking platform through mobile financial services (MFSs) is termed financial inclusion, which could be a key driver to accelerate an economy's economic growth. This study aims to establish whether MFS contributes to financial inclusion, which in turn contributes to the economic growth of Bangladesh. Secondary data of 64 months, ranging from December 2018 to March 2024, has been employed to assess whether mobile financial services contribute to financial inclusion. The sample period has been grouped into 3 terms, on which the t-test has been applied to identify the extent to which the growth of MFSs advances financial inclusion. Results from the t-test advocate significant contributions of MFSs to financial inclusion. Then, the short and long-run contribution of financial inclusion to the economic growth of Bangladesh has been assessed. Secondary monthly data ranging from December 2019 to January 2024 (50 observations) has been utilized using the ARDL model. Foreign direct investment (FDI) has been used as a proxy measure of economic growth. Eleven (11) independent variables representing financial inclusion include number of total registered clients (NORC), number of total transactions (NOTT), total transactions (TT), inward remittance (INREM), cash in transactions (CIT), cash out transactions (COT), personal to personal (P2P), business to personal (B2P), personal to business (P2B), merchant payment (MP), and government payment (GP). Results from the ARDL short-run association and long-run association state that financial inclusion is crucial to Bangladesh’s economic growth.