Can Financial Inclusion Drive Leads to the Inclusive Growth? An Evidence from Pakistan.

Abstract

This research investigates the effect of financial inclusion on inclusive growth in Pakistan. Based on a panel dataset from 2011 to 2024, the research uses a fixed-effects regression framework and robustness tests such as PCSE and Driscoll-Kraay techniques. The study uses digital financial inclusion indicators—coverage breadth, depth of use, and digitalization level—combined with human capital variables and important macroeconomic control variables of inflation, government spending, trade openness, and population growth. Findings reveal that financial inclusion plays a crucial role in economic growth, particularly if supported by the development of human capital. Policy recommendations are to improve digital infrastructure, raise financial literacy, and focus inclusion initiatives on under-served areas.