Exploring the Nexus between Financial Literacy, Electronic Payment, Formal Account Ownership, Savings and Credit to Private Sector Nexus in MINT: Accounting for the Role of Political and Climate Risks
Kingsley O. Ikeh, Emmanuel C. Eleje, Charles O. Manasseh,
DOI: 10.5110/77. 1094 Page: 25-45 Vol: 19 Issue: 01 Year: 2024
This study delves into the intricate nexus between financial literacy, electronic payment, formal account ownership, savings, and credit to the private sector in MINT (Mexico, Indonesia, Nigeria, and Turkey) countries from 2000 to 2021. This study seeks to assess the influence and interactive impact of credit accessibility enhanced by financial literacy, electronic payments, and formal account ownership and credit to the private sector, with a particular emphasis on the influential roles of political and climate risks. Utilizing a robust methodology, the panel Autoregressive Distributed Lag (ARDL) baseline model was adopted to estimate the long and short run. Additionally, panel dynamic Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) models are employed as robustness checks to ensure the reliability and validity of the study findings. Our findings reveal noteworthy insights that show that financial literacy, electronic payments, and formal account ownership exhibit significant negative impacts on credit to the private sector. The role of savings is nuanced, with both negative and positive influences on credit across diverse models. The short-run error correction model (ECM) results indicate the pace of adjustment from short-run shocks to the long-run equilibrium annually. To enhance the understanding of this nexus, the pivotal influence of political and climate risks on credit to the private sector was captured. The FMOLS and DOLS robustness check results underscore the complexity of these nexus, revealing mixed effects in the context of MINT countries. Based on these findings, this study proposes practical recommendations that include the improvement of internet broadband networks to facilitate electronic transactions, the integration of financial education into educational curricula to enhance financial literacy, and addressing political and climate-related crises to foster business and economically friendly environments to enhance credit to the private sector in MINT economies. This study contributes valuable information to the discourse on the intricate dynamics of financial systems in emerging economies, particularly in the context of MINT countries.
Credit to the Private Sector, Financial Literacy and Electronic Payment
Received: 14 December 2023
Accepted: 31 December 2023
Published: 09 January 2024