Does financial development mean financial inclusion? A causal analysis for Eswatini

Abstract

The purpose of this paper is to undertake a causal analysis for Eswatini, which examines whether financial development causes increased financial inclusion. Through Engle & Granger (1987) cointegration analysis, the existence of a long run relationship between the dependent variable, financial inclusion, and the independent variables: financial development and economic growth is investigated. The results indicate unidirectional Granger causality from financial development to financial inclusion and that the variables have a longrun relationship. The results imply that financial development causes financial inclusion in Eswatini. Policy recommendations from these results advise that financial inclusion strategies include policy decisions that are geared to increased financial development.

Keywords: Financial Development; Financial Inclusion; Eswatini.