Essay on Financial inclusion and Firm performance: evidence from developing Africa and Asia

Abstract

This thesis consists of three chapters about two different topics: financial inclusion in developing Africa and Asia; and firm growth in Vietnam. The first chapter examines the association between financial inclusion services provided (bank account, mobile money, or both) and the characteristics of their users in eight developing countries in Africa and Asia. We employ multiple correspondence analysis (MCA) to find that poverty, education, age, gender, and location are the main determinants of financial service usage in these countries. Moreover, we provide a typology of each financial inclusion service users in both regions, as well as its dynamic over time. We find that financial inclusion has been relatively a success in Asia, but is yet to materialized in Africa. The second chapter studies the impact of financial inclusion to reduce poverty at individual level for 8 developing countries in Africa and Asia. In particular, it investigates how individuals overcome poverty by using Bank (BK), Mobile money (MM) or both Bank and Mobile money (BM). The results show that financial inclusion reduces the probability of individuals being poor. However, MM and BM are more efficient than BK as their impacts are greater in magnitude and they target poorer users. The third chapter investigates impact of firm size on firm growth for Vietnamese firms by checking against Gibrat’s law. It finds that before the financial crisis, small firms grow faster than larger ones regardless of their initial size. After the crisis, the results is not much different when using number of employees as a firm size measure. However, when firm size is measured in assets and turnover, after the crisis large firms grow faster than smaller ones, except for 25% of the smallest firms in the first quantile. The results show the relationship between firm size and firm growth vary across different types of firm ownership that confirms the impact of types of firm ownership besides industry.