Impact of Good Governance on Financial Inclusion in India: Evidence from the ARDL Bounds Testing Approach

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Dr. C.R. Bishnoi
Dr. C.R. Bishnoi
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Aashi Jain
Aashi Jain
3
Ayushi Vashistha
Ayushi Vashistha

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Purpose: Financial inclusion plays a crucial role in a country’s economic development. In India, the Reserve Bank of India has actively promoted financial inclusion since 2005. This study examined the impact of good governance on financial inclusion in India by analyzing data from 1996 to 2021 using the Autoregressive Distributed Lag (ARDL) model. Methodology: The study considered the Financial Inclusion Index as the dependent variable, while good governance indicators: Control of Corruption, Government Effectiveness, Political Stability, Regulatory Quality, Rule of Law and Voice and Accountability, were taken as independent variables. Additionally, GDP per capita, Foreign Direct Investment (FDI) and inflation were incorporated as control variables to ensure robust results. The ARDL model, which accommodates variables integrated at different orders, was used to examine both long-run and short-run relationships between financial inclusion and other variables.

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No external funding was declared for this work.

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The authors declare no conflict of interest.

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No ethics committee approval was required for this article type.

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Dr. C.R. Bishnoi. 2026. \u201cImpact of Good Governance on Financial Inclusion in India: Evidence from the ARDL Bounds Testing Approach\u201d. Global Journal of Management and Business Research - B: Economic & Commerce GJMBR-B Volume 25 (GJMBR Volume 25 Issue B2): .

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GJMBR Volume 25 Issue B2
Pg. 25- 38
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Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

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November 25, 2025

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English

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Purpose: Financial inclusion plays a crucial role in a country’s economic development. In India, the Reserve Bank of India has actively promoted financial inclusion since 2005. This study examined the impact of good governance on financial inclusion in India by analyzing data from 1996 to 2021 using the Autoregressive Distributed Lag (ARDL) model. Methodology: The study considered the Financial Inclusion Index as the dependent variable, while good governance indicators: Control of Corruption, Government Effectiveness, Political Stability, Regulatory Quality, Rule of Law and Voice and Accountability, were taken as independent variables. Additionally, GDP per capita, Foreign Direct Investment (FDI) and inflation were incorporated as control variables to ensure robust results. The ARDL model, which accommodates variables integrated at different orders, was used to examine both long-run and short-run relationships between financial inclusion and other variables.

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Impact of Good Governance on Financial Inclusion in India: Evidence from the ARDL Bounds Testing Approach

Dr. C.R. Bishnoi
Dr. C.R. Bishnoi
Aashi Jain
Aashi Jain
Ayushi Vashistha
Ayushi Vashistha

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