The role of the financial inclusion on the relationship between income inequality and economic growth

This thesis investigates the impact of financial inclusion on income distribution and economic growth, along with the role of financial inclusion in the relationship between income distribution and economic growth. Financial inclusion is a concept that indicates the extent to which individuals are involved in rapidly developing financial markets. In order to measure individuals' participation in these markets, a financial inclusion index, known as the financial inclusion index, was calculated. The position of the countries included in the study was shown for the financial inclusion index and the sub-dimensions constituting the index. The impact of the calculated financial inclusion index, along with the Gini coefficient representing income distribution, on per capita GDP, which is used as an indicator of economic growth, was examined using a fixed effects model. Additionally, the dimensions of access, availability, and usage, which constitute the index, were considered separately as indicators of financial inclusion, and their role in the relationship between income distribution and economic growth was examined. Furthermore, in the study, countries were divided into high and low groups based on per capita GDP, income distribution, and financial inclusion to demonstrate how this effect differs. According to the analysis conducted using the fixed effects model, it has been observed that financial inclusion has a positive effect on the level of per capita GDP. Income inequality, on the other hand, has a negative impact on economic growth. Additionally, financial inclusion has been found to be a mitigating factor in the negative effect of income inequality on economic growth. The dimensions of access and availability, which constitute the index, contribute positively to economic growth. All three dimensions help alleviate the negative impact of income inequality on economic growth. When countries are divided into the specified groups, although the relationship between variables is in the same direction, the positive impact of financial inclusion on economic growth is higher for countries in the low-income group. In countries classified as having high financial inclusion (IFI) and high Gini coefficients, financial inclusion has a positive effect on economic growth. However, the results are statistically insignificant for countries with low IFI and low Gini values.