The Relationship Among Financial Inclusion, Non-Performing Loans, and Economic Growth: Insights From OECD Countries

Peng Zhang; Mengxue Zhang; Qiancheng Zhou; Syed Anees Haider Zaidi

doi:10.3389/fpsyg.2022.939426

The Relationship Among Financial Inclusion, Non-Performing Loans, and Economic Growth: Insights From OECD Countries

Front Psychol. 2022 Jul 4:13:939426. doi: 10.3389/fpsyg.2022.939426. eCollection 2022.

Authors

Peng Zhang¹, Mengxue Zhang¹, Qiancheng Zhou¹, Syed Anees Haider Zaidi²

Affiliations

¹ School of Humanities and Social Sciences, Anhui University of Science and Technology, Huainan, China.
² Department of Management Sciences, COMSATS University of Islamabad, Sahiwal, Pakistan.

Abstract

This study implies finding the linkages among financial inclusion, non-performing loans (NPLs), and economic growth. The study uses large panel data of 21 Organization for Economic Corporation and Development (OECD) countries for the dynamic panel estimation by using the Driscoll-Kraay standard errors with fixed effect. The results of the dynamic panel estimation technique revealed the existence of a long-run relationship among financial inclusion, NPLs, and economic growth. Financial inclusion contributes positively to economic growth by reducing NPLs. Furthermore, NPLs negatively impact financial inclusion as well as economic growth. The study presents important policy recommendations to control NPLs and boost the level of financial inclusion in the selected economies.

Keywords: Driscoll-Kraay standard errors; Organization for Economic Corporation and Development (OECD); economic growth; financial inclusion; non-performing loans (NPL).