Financial inclusion, financial innovation, and firms' sales growth

This paper examines the effect of financial inclusion on firms' sales growth in developing countries and also investigates how this effect varies depending on different subsamples (such as during a crisis versus a non-crisis, Asia versus non-Asia, manufacturing versus non-manufacturing, and small- and medium-sized firms versus large- and medium-sized firms). Our first finding is that financial inclusion helps firms increase their sales growth during normal times and in non-Asia regions. After using interaction terms between financial inclusion and financial innovation, our second finding is that financial innovation has a negative impact on the sales growth rate of firms engaging in financial inclusion. Our results provide insights and implications for policy makers and regulators.