Ali Saad Muwafaq

Type of the article: Research Article

Abstract
Financial inclusion has become a key policy instrument for promoting inclusive growth, particularly in oil-dependent economies where traditional growth channels may not effectively support entrepreneurial activity. This study aims to analyze the impact of financial inclusion on stimulating entrepreneurship in Iraq by examining the relationship between indicators of financial access, financial usage, and financial infrastructure and entrepreneurial activity, as well as investigating the short-run and long-run dynamics of this relationship in a manner that supports economic diversification. The study employs monthly data covering the period 2020–2024 and applies the autoregressive distributed lag methodology to test for cointegration, estimate short-run and long-run coefficients, and measure the speed of adjustment toward long-run equilibrium. The empirical results show that bank accounts and automated teller machines have positive and statistically significant long-run effects on entrepreneurship, with elasticities of 1.415 and 0.539, respectively, while electronic payment cards have a positive but statistically insignificant effect. Education expenditure and economic growth also exert positive and significant effects, with elasticities of 0.536 and 0.332, respectively. These findings indicate that financial access, financial infrastructure, human capital development, and favorable economic conditions contribute to entrepreneurial activity in Iraq. The findings confirm that financial inclusion and human capital development represent more effective channels for stimulating entrepreneurial activity and advancing economic diversification. They also highlight the importance of expanding digital financial services and enhancing access to the formal financial system as effective mechanisms for supporting entrepreneurship and reducing dependence on oil-related economic activity.