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Abstract
Using a dataset that includes 24 developing and developed countries for the period 1984–2017, this research adopts outstanding deposits with commercial banks to GDP ratio and research and development (R&D) expenditure to GDP ratio as main proxies of financial inclusion and R&D, respectively. The empirical results suggest that promoting financial inclusion or R&D can offset the harmful effects of uncertainty on economic performance and that the impact of R&D with uncertainty is statistically significantly greater than the impact of financial inclusion with uncertainty. Moreover, our subsample analyses indicate that the mitigating effects of financial inclusion and R&D exist in nonfinancial crisis periods, developed countries, and the European region. To address endogeneity concerns, we employ six instrumental variables in a two-stage least squares regression (IV-2SLS). Our findings have useful policy implications to government for dealing with economic policy uncertainty for the economy’s benefit.
Original language | English |
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Pages (from-to) | 307-325 |
Number of pages | 19 |
Journal | Applied Economics |
Volume | 54 |
Issue number | 3 |
DOIs | |
State | Published - 2022 |
Keywords
- Financial inclusion
- IV-2SLS
- R&D
- economic performance
- economic policy uncertainty
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