Inclusion financière dans les pays de la communauté de l’Afrique de l’Est : Ses déterminants et ses effets sur la stabilité économique

Abstract

This paper investigates the determinants of financial inclusion and its effects on economic stability in five countries of the East African Community. Financial inclusion is captured through domestic credit to the private sector by commercial banks. Economic stability is captured through financial stability and macroeconomic stability. Financial stability is captured by the bank z-score while the indicator of macroeconomic stability is inflation. The data used was taken from the World Bank's World Development Indicators and Global Financial Development database. Analysis of the data using static panel models showed that the fixed effects model is better for studying the determinants of financial inclusion in EAC countries while the random effects model was good for analysing the effects of financial inclusion on economic stability. The results of the fixed effects model show that per capita income, number of mobile phone subscribers, interest rate on loans positively and significantly influence financial inclusion in the EAC. While the results of the random effects model show that financial inclusion through credits negatively and significantly influences financial stability while through deposits, financial inclusion positively and significantly influences financial stability. As for macroeconomic stability, the results show that financial inclusion through credits has a negative and significant effect on macroeconomic stability while through deposits; financial inclusion positively influences macroeconomic stability. These results suggest the need to strengthen factors aimed at enhancing financial inclusion on the one hand, and to encourage policies aimed at reducing the level of inflation that undermines macroeconomic stability on the other. Determinants, Financial inclusion, Economic stability, East African Community