Abstract:
Law and finance theory explains how legal regime and financial development affect economic growth and poverty reduction relationship. Nonetheless, poverty remains a critical issue in sub-Saharan African economies. This thesis investigates the role of banking sector regulation dimensions on the relationship between digital financial inclusion and poverty reduction in 25 SSA economies using annual unbalanced panel data from 2014 to 2020. The analysis employed was system general method of moments and quantile method of moments with fixed effects. It emerged that digital financial inclusion and banking sector regulation separately promotes poverty reduction. Further, the findings revealed that some dimensions of banking sector regulations contribute to enhance digital financial inclusion. Also, institutional quality positively moderates between banking sector regulation and digital financial inclusion. Banking sector regulations interact significantly with digital financial inclusion to reduce poverty in SSA economies. Digital financial inclusion significantly reduces poverty level across the all quantiles of poverty distribution. Policymakers, regulators and international institutions should design and implement policies that enhance digital financial inclusions such as mobile money initiatives, and mobile cellular subscriptions, which can enhance poverty reduction at each quantile of poverty distribution. Banking regulatory frameworks should be crafted to embrace policies and sound practices that engender growth effect and inclusivity into financial system, thereby promoting digital financial inclusion and leading ultimately to alleviate poverty. It is therefore recommended that central banks in SSA should concurrently implement digital financial inclusion initiatives and banking sector regulations aimed at reducing poverty.
