Despite the growing body of literature on population age structure (PAS) and economic growth, empirical evidence on the role of financial inclusion (FI) in moderating the effect is quite scarce, particularly for the Middle East/North Africa (MENA) region. This study aims to investigate the moderating impact of FI on the relationship between PAS and economic growth from the perspective of public good (PG) theory in MENA countries.
Using a sample of 10 MENA countries (i.e. Algeria, Bahrain, Egypt, Jordan, Morocco, Oman, Qatar, Saudi Arabia, Tunisia and the UAE) from 2002 to 2023, this study uses the fixed-effect model, pooled regression, two-stage least squares and system generalized method of moments (GMM) regression.
The findings show that FI increases economic growth, while a high age dependency ratio negatively impacts economic growth. The interaction between FI and working-age population is found to create a complementary effect, acting as a catalyst to improve economic growth. Additionally, the relationship is found to be stronger in high-income countries compared to lower-income countries within the MENA region.
The moderating impact of FI on the relationship between PAS and economic growth is differ in different contextual regions, based on their unique institutional setting, requiring future research.
Policymakers should focus on improving financial inclusiveness of the working-age population through implementing financial technology (fintech), increasing the female labor force and promoting trade openness to accelerate economic growth in both high- and lower-income countries in the MENA context.
To the best of the authors' knowledge, this research offers novel insights by examining, for the first time, the moderating impact of FI on the relationship between PAS and economic growth in both high- and lower-income MENA countries. Furthermore, this study contributes to the theoretical literature by examining the proposed relationship through the lens of PG theory.
