Purpose: Since the strike of the 2007-2008 global financial crises, financial stability has been discussed with immense interest in academic and policy circles. Following this essence, this paper aims to investigate the nexus of financial inclusion, competition concentration and financial stability. Design/methodology/approach: To analyze this relationship, this study uses different inclusion indices constructed by principle component analysis, Boon indicator, different concentration measures and Z-score, for a sample of 92 countries and subsamples based on income and economic grouping of those countries as well as for pre- and post-crisis episodes over the period of 2004-2014. This study also investigates the variation in inclusion–stability relationships in the presence of competition and concentration. This study uses two-step system-generalized method of moments (GMM) and two-stage least square to address the endogeneity. Findings: The study finds that competition contributes to stability; however, there is evidence of fragility in the presence of concentration in the banking industry. Moreover, this study finds a U-shaped inclusion–stability relationship. The overall results of this study support the competition–stability view and a trade-off between inclusion and stability, which are consistent and robust to alternative econometric tests. Research limitations/implications: Financial inclusion should be endorsed with caution in low-income, middle-income and emerging countries, and prudent policies should be taken to govern the market concentration to maintain financial stability. Originality/value: To the best of the authors’ knowledge, this paper is the first to explain the impact of financial inclusion on financial stability in the presence of market heterogeneity.

Financial deregulation after financial repression during 1980s and 1990s has stimulated a fierce competition among banks across the world. In pace with this, banking industry of Bangladesh is also experiencing an intense competition, since it is composed of a large number of banks. Considering this upsurge, our study aims to explore the impact of competition and efficiency on financial stability of Bangladeshi banks over 2009–2017. For exploring this nexus, we calculate Boone indicator and Z-score, construct banking efficiency index by principal component analysis, using bank-level data to measure competition, stability and efficiency, respectively, and analyze the impact of efficiency on financial stability at different levels of competition. We address the endogeneity of the estimation by employing two-step system GMM and different robustness checks. The findings of our study suggest a nonlinear competition–stability relationship, and though efficiency contributes to stability, the impact is moderated in the presence of competition. Our findings are robust to alternative measures of competition, stability and control variables, which could be useful for policy makers to formulate strategies and policies to maintain financial stability.

Purpose: Despite numerous evidence of policy trade-off in financial inclusion-stability nexus, little is known about the role of governance quality to align policy goals and maximizing the social benefits. Therefore, to fill the gap, this study focuses to investigate the moderating effect of country governance (CG) in the interplay between financial-inclusion (FI) and financial-stability (FS), using a large panel of 84 economies covering the years 2004–2017.Design/methodology/approach: For attaining this objective, the study constructs several indexes for FI, FS and CG using principal component analysis (PCA) and examines how FI influences FS at different CG levels applying advanced econometrics. Findings: The results show that CG plays a very crucial role in eradicating the trade-off and strengthens the synergy between FI and FS. The findings are insensitive to several robustness validations and could be constructive for policymakers to devise policies and to ensure financial stability.Originality/value: As far as the authors are aware, this is the only paper that empirically explains CG's role in FI-FS nexus.

In the context of developing economies, Foreign Direct Investment (FDI) has long been acknowledged for its potential to stimulate economic growth. However, with the evolving understanding of development encompassing not only economic prosperity but also environmental and social well-being, the impact of FDI on sustainable development has become a subject of increasing importance and complexity. To shed light on this multifaceted relationship, our study empirically investigates the causal link between FDI and sustainable development in a panel of 48 African economies spanning the period from 1990 to 2020. We employ a robust measure of sustainable development, Adjusted Net Savings (ANS), as well as an innovative Sustainable Economic Growth (SEG) index that encompasses the three core pillars of sustainable development. FDI is measured both as FDI net inflow as a percentage of GDP and as the stock of FDI as a proportion of GDP for robustness testing. Our analytical approach utilizes the GMM-PVAR model. Our findings reveal a noteworthy unidirectional negative causality running from foreign direct investment to sustainable development across African economies. Intriguingly, the magnitude of this adverse impact is more pronounced in low-income nations, while a favorable causal effect of FDI on sustainable development is observed in high-income countries within the region. Importantly, these results hold true across various measures of sustainable development and different metrics of foreign direct investment. As a result, our study offers valuable insights for policymakers in Africa and beyond. Recognizing the nuanced impact of FDI on sustainable development, we propose tailored policy recommendations that take into account the income level of countries to maximize the benefits of foreign investment while mitigating potential adverse effects. Moreover, we advocate for ongoing research and policy innovation to further align FDI with the broader goals of sustainable development on the African continent.