The role of financial inclusion in firm performance: A multidimensional analysis on developing countries

Inclusion for financial resources is of particular importance for firms to continue their activities, realize their investments, create employment and other performance indicators. It is accepted that inclusion for the products and services offered by the financial system is a significant factor in the success of firms in developing countries. In this context, it is aimed to investigate the role of financial inclusion in the performance of firms. Accordingly, data from 23 sectors and 42.744 firms for 82 developing countries have been subjected to panel data analysis. In the study, secondary data obtained from the World Bank's Institutional Surveys database is used. In the study, four different multidimensional panel data models with country, sector, firm and year size are developed. In the models, the effect of firms' financial inclusion levels on their performance is examined with the characteristics of the firms'. In the analysis of the study, it is first tested whether the models have a country, sector and year effect, and after determining the existence of all three effects, the estimation process of the models is started. According to the findings obtained as a result of the analyses, it is determined that the firms that have access to and use financial products and services own more sales than the firms that cannot access and use these services. In other words, it has been determined that financial inclusion in firms has a positive effect on the performance of firms. Furthermore, the study's findings suggest that firms that define finance inclusion as barriers have fewer sales than firms that do not define finance inclusion as barriers. However, it has been found that the age of the firm positively affects the performance of the firms. It has been concluded that exporting firms have more sales than non exporting firms, firms with foreign partnership than firms without foreign ownership. Yet, it is another finding from the analysis that small firms have less sales than large firms according to the number of employees. In general, it has been concluded that factors export of firms, the age of the firms, the presence of foreign partnerships and its size positively affect its performance. As a result, it has been revealed that financial inclusion positively affects firm performance in developing countries.