Financial Accessibility and Economic Growth: An Assessment of Indian Economy

Abstract

Financial inclusion is increasingly being recognized as one of the decisive factors towards economic growth and an important tool to address the issue of equitable growth and helpful in minimizing the problem of poverty. This study is an attempt to examine financial inclusion dimensions of the Indian banking sector in terms of penetration, accessibility and usage, and their impact on economic growth. VAR model is applied to measure the linkage of various financial inclusion dimensions with GDP per capita. The study also conducts causality analysis to examine the finance growth linkage in association with financial accessibility and economic growth. The time taken for the study is 2006 to 2019. Granger causality test found that all the explanatory carried unidirectional relation with GDP and none of the parameter demonstrated bidirectional relation with GDP. The existence of unidirectional relation between numbers of deposits accounts for GDP is found at a 10% significance level.