Assessment of the Effects of Good Governance on Financial Inclusion in the CEMAC Zone

Abstract

The process of making and enforcing decisions in an institution could greatly account for the extent to which individuals can access financial services. This is evident in the fact that some governance processes impacting institutional quality tend to act as barriers that exclude people from participating in the financial sector. It is thus the prerogative of good governance to improve the availability and equality of this financial access to citizens who can use these services to improve their lives. This paper examines the effect of good governance on financial inclusion in the CEMAC Zone. It uses the causal and the expost-factor research design. Time series data from 2000 to 2021 were collected mainly from the World Bank database, IMF and the World governance indicators. From the results, government effectiveness was found to have a positive but insignificant effect on financial inclusion in CEMAC Zone. The results also indicated that political stability negatively and significantly affects financial inclusion. Control of corruption was also found to have a negative and significant effect on financial inclusion in CEMAC Zone. The study recommends that Government effectiveness can be used as a tool to promote financial inclusion by relaxing the documentation requirements for opening accounts or creation of commercial banks in the sub-region. This will increase the number of commercial banks in the countries and increase deposits as well as deposit accounts.