ISSN: 2222-6990
Open access
This paper investigates the impact of financial inclusion on firms’ borrowing. The paper applies the two-step system generalized method of moment (GMM) because it minimizes endogeneity concerns. The results reveal that automatic teller machines as financial inclusion proxy has a positive impact on firms’ borrowing in ten African nations. Likewise, bank branches as a financial inclusion proxy has a positive impact on firms’ borrowing in ten African nations. The results are robust to alternative model specifications. The results suggest that the firms’ managers may profit from additional borrowing as banks’ financial inclusion strategy attract more deposits to lend to firms.
Abubakar, A. M., Daneji, B. A., Muhammed, A. I., and Chekene, I.-A. B. (2020). Driving faster financial inclusion in developing nations. Technology Audit and Production Reserves, 24(52), 35–40.
Arellano, M., and Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence with an application for employment equations. Review of Economic Studies, 58, 277–297.
Allen, F., Demirguc-Kunt, A., Klapper, L., and Martinez Peria, M. S. (2016). The foundations of financial inclusion: understanding ownership and use of formal accounts. Journal of Financial Intermediation, 27, 1–30.
Anarfo, E. B., Abor, J. H., and Achampongosei, K. (2020). Financial regulation and financial inclusion in Sub-Saharan Africa: Does financial stability play a moderating role? Research in International Business and Finance, 51, 1-11. https://doi.org/10.1016/j. ribaf.2019.101070
Ayyagari, M., and Beck, T. (2015). Financial inclusion in Asia: an overview. SSRN Electronic Journal. DOI: 10.2139/ssrn.2707540
Blundell, R., and Bond, S. (1998). Initial condition and moment restriction in dynamic panel data Models. Journal of Econometrics, 87, 115-143.
Chakraborty, I. (2010). Capital structure in an emerging stock market: the case of India. Research in International Business and Finance, 24, 295-314.
Chaklader, B., and Jaisinghani, D. (2017). Testing dynamic trade-off theory of capital structure: an empirical study for the textiles industry in India and China. Afro-Asian Journal ofFinance and Accounting, 7(4), 378–401.
Chauvet, L., and Jacolin, L. (2017). Financial inclusion, bank concentration, and firm Performance. World Development, 97, 1-13.
Cheng, S., and Shiu, C. (2007). Investor protection and capital structure: International evidence. Journal of Multinational Financial Management, 17, 30–44.
DeAngelo, H., and Masulis, R. W. (1980) ‘Optimal capital structure under corporate and personal Taxation’, Journal of Financial Economics, 8(1), 3–29.
DeAngelo, H. (2022). The capital structure puzzle: What are we missing? Journal of Financial and Quantitative Analysis, 57(2), 413–54
Demirguc-Kunt, A., Klapper, L., Singer, D., Ansar, S., and Hess, J. (2018). The global findex database 2017: measuring financial inclusion and the fintech revolution. The World Bank. file:///C:/Users/User/Downloads/978146481259
Demirguc-Kunt, A., and Maksimovic, V. (1999). Institutions, financial markets and firm debt Maturity. Journal of Financial Economics, 54, 295-336.
Flannery, M. J., and Hankins, K. W. (2013). Estimating dynamic panel models in corporate Finance. Journal of Corporate Finance, 19(1), 1–19.
Fowowe, B. (2017). Access to finance and firm performance: Evidence from African countries. Review of Development Finance, 7(1), 6–17. https://doi.org/10.1016/j.rdf.2017.01.006
Hanousek, J., and Shamshur, A. (2011). A stubborn persistent: is the stability of leverage ratios determined by the stability of the economy. Journal of Corporate Finance, 5(17), 1360-1376.
Homapour, E., Su, L., Caraffini, F., and Chiclana, F. (2022). Regression analysis of macroeconomic conditions and capital structures of publicly listed British firms. Mathematics, 10(7), 1–28.
Jarallah, S., Saleh, A. S. and Salim, R. (2019). Examining pecking order versus trade?off theories of capital structure: New evidence from Japanese firms. International Journal of Finance and Economics, 24, 204–211.
Kaouther, T., Viviani, J.-L. and Belkacem, L. (2019). From ethical principles to financial decision theoretical foundations and empirical comparison with conventional banks of Islamic banks capital structure’, SSRN Electronic Journal, 1–28.
Khandare, D. V. (2019), ‘Financial inclusion: empirical study of BRICS countries. International Journal of Social Science and Economic Research, 4(3), 3319–3334.
King, R. G., and Levine, R. (1993b). Finance and growth: schumpeter might be right. Quarterly Journal of Economics, 108(3), 717–737.
Köksal, B., and Orman, C. (2015). Determinants of firm capital structure: evidence from a major developing economy. Small Business Economics, 44(2), 255–282.
Matemilola, B. T., Bany-Ariffin A. N., Azman-Saini, W. N. W., and Annuar Md Nassir (2019).Impact of institutional quality on the capital structure of firms in developing countries. Emerging Markets Review, 39, 175-209.
Maity, S., and Sahu, T. N. (2022). Bank branch outreach and access to banking services toward financial inclusion: an experimental evidence. Rajagiri Management Journal, 17(2), 170–182.
Modigliani, F., and Miller, M. H. (1963). Corporate income taxes and the cost of capital?: A correction. The American Economic Review, 53(3), 433-443.
Modigliani, F., and Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment, The American Economic Review, 48(3), 261–297.
Myers, S. C. (1984). The capital structure puzzle. Journal of Finance, 39(3), 575-592.
Neaime, S., and Gaysset, I. (2018). Financial inclusion and stability in MENA: evidence from poverty and inequality. Finance Research Letters 24, 199–220.
Nguyen, J. H., and Phan, H. V. (2020). Carbon risk and corporate capital structure. Journal of Corporate Finance, 64. https://doi.org/10.1016/j.jcorpfin.2020.101713
Nizam, R., Karim, Z. A., Sarmidi, T., and Rahman, A.A. (2021). Financial inclusion and firm growth in Asean-5 countries: new evidence using threshold regression. Finance Research Letters 41, https://doi.org/10.1016/j.frl.2020.101861 (forthcoming)
Ozili, P. K. (2021). Financial inclusion research around the world: A review. Forum for Social Economics, 50(4), 457–479.
Öztekin, Ö., and Flannery, M. J. (2012). Institutional determinants of capital structure adjustment speeds. Journal of Financial Economics, 103(1), 88–112.
Schumpeter, J. (1934). The theory of economic development. Cambridge, MA: Harvard University Press.
Semuel, H., and Nurina, S. (2015). Analysis of the effect of inflation, SBI interest rates, and exchange rates on the money supply in Indonesia. Proceedings of the International Conference on Global Business, Economics, Finance and Social Sciences, 4(1), 7-20.
The World Bank. (2022). Financial Inclusion. https://www.worldbank.org/en/topic/ financial inclusion /overview. Access date: 20th of December 2023.
Wasiuzzaman, S., & Nurdin, N. (2019). Debt financing decisions of SMEs in emerging markets: empirical evidence from Malaysia. International Journal of Bank Marketing, 37(1), 1–21. https://doi.org/10.1108/IJBM-12-2017-0263
Yusup, A. K., and Susilawati, C. E. (2023). How do political connection and intellectual capital affect the debt usage of majority shareholders? Evidence in Indonesia. International Journal of Business and Emerging Markets, 15(1), 34-51.
Zeitun, R., and Haq, M. M. (2015) ‘Debt maturity, financial crisis and corporate performance in GCC countries: a dynamic-GMM approach, Afro-Asian Journal of Finance and Accounting, 5(2), 231–247.
Hayatu, A., A.N, B.-A., Matemilola, B. T., & Ni, S. W. (2025). Financial Inclusion Impact on Firms’ Borrowing. International Journal of Academic Research in Business and Social Sciences, 15(3), 648–660.
Copyright: © 2025 The Author(s)
Published by HRMARS (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode