Abstract
Financial stability is one of the important issues that policymakers have increasingly noticed in the last two decades. Adopting preventive measures to deal with risk in the financial sector and building strength in financial institutions to reduce costs during financial crises are the main elements of financial stability policy. Accordingly, over the past three decades, financial systems in many countries have seen major reforms through the adoption of financial inclusion and, more recently, increased financial interest. In this regard, the purpose of this study is to investigate the effect of financial literacy and financial inclusion on financial stability in a selection of exporting countries during the period 2010 to 2021. In order to analyze the data, the generalized method of moments (GMM) has been used. The findings of the research show that financial inclusion has had a negative and significant effect on financial stability in the selected countries. Also, the results showed that financial literacy has been able to improve financial stability in the studied countries to some extent. Based on this, it is concluded that the expansion of financial inclusion due to the wide participation of low-income people in the formal financial system increases the cost of transactions and information, which causes greater inefficiency in the financial system. Also, increasing the level of financial literacy, on the one hand, helps people to make the most appropriate financial decisions according to their situation and, on the other hand, reduce errors caused by behavioural tendencies. In addition, the active participation of financially literate people in financial markets and their preference for formal financial institutions for their financial needs reduces the likelihood of financial system fragility.Keywords: financial inclusion, financial literacy, financial stability, selected oil exporting countries.The effect of financial literacy and financial inclusion on financialstability: Selection of oil exporting countriesMarwan abdulrazak muterPh.D Student Department of Economics, Isfahan (Khorasgan) Branch,Islamic Azad University, Isfahan, IranEmail:
[email protected] Sharifi RenaniAssociate Professor of Economics, Isfahan (Khorasgan) Branch,Islamic Azad University, Isfahan, Iran (corresponding author)Email:
[email protected] Qasim ShandiProfessor of Economics, Al-kut University College, Wasit, IraqEmail:
[email protected] HafeziAssistant Professor of Economics, Isfahan (Khorasgan) Branch,Islamic Azad University, Isfahan, IranEmail:
[email protected] Author: Hossein Sharifi RenaniAbstract : Financial stability is one of the important issues that policymakers have increasingly noticed in the last two decades. Adopting preventive measures to deal with risk in the financial sector and building strength in financial institutions to reduce costs during financial crises are the main elements of financial stability policy. Accordingly, over the past three decades, financial systems in many countries have seen major reforms through the adoption of financial inclusion and, more recently, increased financial interest. In this regard, the purpose of this study is to investigate the effect of financial literacy and financial inclusion on financial stability in a selection of exporting countries during the period 2010 to 2021. In order to analyze the data, the generalized method of moments (GMM) has been used. The findings of the research show that financial inclusion has had a negative and significant effect on financial stability in the selected countries. Also, the results showed that financial literacy has been able to improve financial stability in the studied countries to some extent. Based on this, it is concluded that the expansion of financial inclusion due to the wide participation of low-income people in the formal financial system increases the cost of transactions and information, which causes greater inefficiency in the financial system. Also, increasing the level of financial literacy, on the one hand, helps people to make the most appropriate financial decisions according to their situation and, on the other hand, reduce errors caused by behavioural tendencies. In addition, the active participation of financially literate people in financial markets and their preference for formal financial institutions for their financial needs reduces the likelihood of financial system fragility.
