The nexus of remittance, governance, human capital and financial inclusion in enhancing financial reachability in selected countries

Financial inclusion is pivotal in fostering economic development, particularly in low and lower-middle-income countries. The objective of this study is to analyze the relationship between remittance, human capital and governance quality in enhancing financial reachability through financial inclusion across 93 countries. Financial inclusion in the country is calculated using the financial inclusion index (FII), which is constructed using Principal Component Analysis (PCA) by integrating penetration, accessibility and usability dimensions. Utilizing the Dynamic Generalized Method of Moments (GMM) approach, the study examines how remittance inflows and human capital, moderated by governance quality, influence financial inclusion. The findings reveal a nonlinear relationship between remittances and financial inclusion. Initially, remittances negatively affect financial inclusion. However, this relationship transitions positively within robust governance frameworks. The threshold effect is most noticeable in low and lower-middle-income countries, where governance reforms help overcome infrastructural and regulatory constraints. Conversely, in uppermiddle- income economies, high transfer costs and compliance burdens moderate the benefits of large inflows. Financial inclusion shows a strong positive relationship with human capital, which is significantly improved by enhanced quality of governance. Investment in education and financial literacy equips individuals to utilize financial services effectively, thereby expanding overall financial accessibility. The study recommends policies to strengthen governance frameworks to foster trust and efficiency in financial systems. Regulatory simplification can enhance remittance inflows, and public-private partnerships are crucial for effective implementation. Additionally, targeted public investments in rural banking infrastructure, digital payment systems, and comprehensive financial literacy programs are essential. These interventions strategically leverage remittance inflows, driving sustainable economic growth and improving financial inclusion outcomes in low- and middle-income countries