The impact of financial inclusion on economic growth in Kosovo

• Pages: 135-143

Vo

l. 7 N

o

. 1

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arch, 202

1

ISS

N 2410-391

8

A

cces on

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ine at www.ii

p

cc

l

.or

g

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35

A

cademic Journal o

f

Business,

A

dministration, Law and Social Sciences

II

PCCL Publishin

g

, Graz-

A

ustria

The impact of f‌i nancial inclusion on economic

g

rowth in Kosov

o

PhD

(

C.

)

Fatmir Gash

i

S

outh

E

ast

E

uropean

U

niversity, Tetov

o

Ab

str

a

ct

The aim of this paper is to examine the impact of f‌i nancial inclusion products in economic

growth in Kosovo. The paper tries to indentify if f‌i nancial retail products or services: bank

b

ranches, payment terminals (

A

TM and P

O

S) and electronic payment instruments and

transactions (

E

-banking), have impact in economic growth, expressed by real GDP in Kosovo.

The data used in this paper are taken from the Central Bank of the Republic of Kosovo, over

the period 2007-2019. The study is original in nature and makes e

f‌f

ort to promote increasing

f‌i nancial inclusion in Kosovo, which creates many possibilities for households and businesses

to have be er access to

f‌i

nancial retail products, increase payments, savings and investments

which lead to economic prosperity and growth. The f‌i ndings of this paper will be of value for

i

nstitutions in Kosovo in order to develop the f‌i nancial inclusion products thus contribute to

e

conomic growth in country.

K

e

y

words:

F

inancial inclusion,

A

tm, Pos,

E

-bankin

g

, economic

g

rowth.

I

ntr

odu

ct

io

n

T

he relationshi

p

between

f‌i

nancial develo

p

ment and economic growth has remained

a

n im

p

ortant issue o

f

debate since the

p

ioneering work o

f

Goldsmith 1969, Mc Kinnon

1973 and Shaw 1973. Financial s

y

stems were identi

f‌i

ed b

y

f‌i

nancial size or de

p

th,

e

x

p

ressed through di

f‌f

erent indicators, like li

q

uid liabilities and bank assets, de

p

osits

a

n

d

p

rivate cre

d

it. (Levine,R., 1997).

But, new theories o

f

f‌i

nancial develo

p

ment, exce

p

t

f‌i

nancial de

p

th indicators,

e

m

p

hasize the role o

f

f‌i

nancial inclusion as one im

p

ortant segment o

f

f‌i

nancial

develo

p

ment. The

p

ioneers o

f

f‌i

nancial inclusion are authors Galor and Zeira 1993;

a

n

d

Banerjee an

d

Newman 1993, w

h

o

h

ave create

d

t

h

e conce

p

tua

l

b

ac

k

groun

d

f

or theor

y

o

f

f‌i

nancial access, as an im

p

ortant segment o

f

f‌i

nancial develo

p

ment

(

Galor,

O

.&Zeira,J, 1993

).

T

he researchers o

f

World Bank have develo

p

ed the new

f

ramework

f

or develo

p

ed

f‌i

nancial s

y

stems, including

f‌i

nancial de

p

th,

f‌i

nancial inclusion,

f‌i

nancial e

f‌f‌i

cienc

y

a

nd

f‌i

nancial stabilit

y

.

A

ccording to Global Financial Develo

p

ment Database,

f‌i

nancial

i

nclusion, including

f‌i

nancial de

p

th,

f‌i

nancial e

f‌f‌i

cienc

y

and

f‌i

nancial stabilit

y

, are

f

our measures o

f

f‌i

nancial develo

p

ment, ever

y

one including di

f‌f

erent

f‌i

nancial

i

ndicators, both

f

or

f‌i

nancial institutions and

f‌i

nancial markets. (Cihak,M.,Demirguc-

K

unt,

A

.,Fe

y

en,

E

.&Levine,R, 2012

).

D

uring the last two decades, man

y

countries have engaged in activities to im

p

rove

f‌i

nancial develo

p

ment and es

p

eciall

y

f‌i

nancial inclusion

p

roducts and services.

A

t

t

he countr

y

level, about two-thirds o

f

regulator

y

and su

p

ervisor

y

agencies are now

charged with enhancing

f‌i

nancial inclusion.