ISSN 2308-8559 e-ISSN 2415-8224
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https://doi.org/10.62763/ef/1.2026.19

Volume 16, No. 1, 2026

19-27

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    • Monetary policy transmission mechanisms and financial inclusion in West Africa countries

    Biliqees Ayoola Abdulmumin Doris Oluwatosin Adeoti

    Received 10.11.2025, Revised 09.02.2026, Accepted 26.03.2026 Published 01.04.2026

    Abstract

    The purpose of the study was to examine the influence of monetary policy on financial inclusion in sixteen West African countries using panel data from the International Monetary Fund database covering 2010-2021. Financial inclusion was measured through a composite index generated via principal component analysis, incorporating indicators of financial institution penetration, availability, and usage. As a result, the following indicators were determined: money supply (MS, β = 2.948901, p < 0.01), open market operations (OMO, β = 0.011170, p < 0.01), liquidity ratio (LIQR, β = 1.591667, p < 0.01), reserve money (RM, β = 0.800120, p = 0.012), and monetary policy rate (MPR, β = 0.040445, p < 0.01). Cash reserve ratio (CRR, β = -0.18154, p = 0.637) and inflation (INF, β = -0.001634, p = 0.914) were not statistically significant. The model explained about 68% of the variation in financial inclusion (R² = 0.6834). The findings revealed that money supply significantly and positively influenced financial inclusion, showing that liquidity expansion increased banks’ lending capacity and supported wider outreach. Open market operations also had a strong positive effect, as effective liquidity management fosters stability and encourages greater access to financial services. The bank liquidity ratio positively impacted inclusion by strengthening depositor confidence and enhancing banks’ resilience. Reserve money and monetary policy contributed positively and significantly to enhancing financial inclusion. The cash reserve ratio, and inflation showed no significant impact, suggesting that their influence was indirect or constrained by structural financial limitations in the region. The study concluded that liquidity-enhancing monetary policies were critical for improving financial inclusion in West Africa. It was recommended expanding money supply, strengthening open market operations, enforcing robust bank liquidity ratios, and adopting cautious interest rate policies, supported by digital financial services and financial literacy initiatives

    Keywords:

    cash reserve ratio; open market operations; liquidity ratio; money supply; reserve money

    Suggested citation
    Abdulmumin, B.A., & Adeoti, D.O. (2026). Monetary policy transmission mechanisms and financial inclusion in West Africa countries. Economic Forum, 16(1), 19-27. https://doi.org/10.62763/ef/1.2026.19
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