Assessing the role of global and regional economic integration on financial inclusion among BRICS economies

Purpose The purpose of this study is to examine the impact of economic integration on financial inclusion in emerging economies. It seeks to uncover how global and regional economic integration can improve the access and usage of financial services, thereby fostering inclusive economic development. Design/methodology/approach To achieve the stated objective, the study uses principal component analysis alongside a weighted method to construct separate indexes for financial inclusion and economic integration. Additionally, it applies alternative models of panel regression analysis on the data set of BRICS economies spanning from 2000 to 2022. Findings The pooled ordinary least squares and system generalised method of moments estimates confirm that both global and regional economic integration exert a significant positive impact on financial inclusion as measured by the proxies of financial access and usage among the BRICS economies. The empirical findings indicate that, in contrast to regional integration, global economic integration plays a more significant role in advancing financial inclusion. Moreover, in terms of control variables, the empirical estimate indicates that economic growth and institutional dimensions assist in expanding the access and usage of financial services. On the other hand, technological progress, as estimated by mobile subscribers, only helps increase access to financial services within the BRICS economies. Research limitations/implications The findings of the study indicate that policymakers in BRICS economies need to prioritise global economic integration to improve financial inclusion, as it has a profound impact compared to regional economic integration. Promoting deeper global economic integration can foster better access to financial services and increase their usage. It is imperative for stakeholders and financial institutions to prioritise the development of policies aimed at enhancing global market integration and thereby improving financial inclusion in the BRICS economies. Originality/value The study is an original work as it constructs separate indexes for financial inclusion and regional economic integration. Unlike previous studies, using these indexes, this study helps us comprehend the link between economic integration and financial inclusion.