This paper aims to examine the relationship between financial inclusion, monetary policy and financial system stability in 15 Middle Eastern and North African (MENA) countries.
The study employs a quantitative research design, using a Panel Vector Autoregression model to analyze data from 15 MENA countries over 20 years (2003–2022).
Findings reveal a positive relationship between financial inclusion and stability, as inclusion fosters systemic resilience and trust in financial institutions, resulting in a diverse clientele for financial institutions. Financial stability, in turn, enhances inclusion by reducing costs, encouraging private investments, and expanding credit access. While financial inclusion positively impacts money supply, a long-term inverse relationship between money supply and inclusion highlights structural inefficiencies.
The findings emphasize the importance of adaptive regulatory frameworks and coordinated policy strategies to harness the potential of financial inclusion in fostering economic stability and sustainable development. Policymakers, especially in less-developed MENA countries, are urged to prioritize financial inclusion as a cornerstone for promoting economic resilience and growth.
This paper contributes to the understanding of the synergies between financial inclusion and macroeconomic stability, offering actionable insights for policymakers in the MENA countries.
