Does economic policy uncertainty impedes financial inclusion in BRICS economies: the mediating role of quality of governance

Financial inclusion is critical in extending financial services to even the most remote people, thereby contributing to economic prosperity by creating revenues. Nevertheless, researchers all across the world have discovered that economic and financial events frequently disrupt financial inclusion. Considering the growing importance of financial inclusion, the current study attempts to analyze how economic policy uncertainty influences financial inclusion in BRICS countries. Moreover, the study also examines the moderating role of quality of governance on the nexus of financial inclusion and economic policy uncertainty. In order to attain the above objectives, the study employs a two-step system-generalized method of moments. In addition, the study employs SELPDM method as a robustness measure on the panel data spanning from 2004 to 2021. The empirical outcome reveals that high economic policy uncertainty reduces financial inclusion in BRICS countries. However, when the index of quality of governance, constructed using principal component analysis, interacts with economic policy uncertainty, it moderates detrimental impact of economic policy uncertainty on financial inclusion. The finding assists in understanding the nexus of financial inclusion and economic policy uncertainty. Moreover, it also helps policymakers to comprehend the moderating role of quality of governance on the nexus of financial inclusion and economic policy uncertainty and offers valuable recommendations. The study is an original work and offers several policy recommendations.