Financial inclusion (FI) plays a determining role in achieving inclusive and sustainable macroeconomic policy outcomes, one of the fundamental premises of the Sustainable Development Goals (SDGs). Further, economies’ central banks formulate related policies and contribute as enablers to the transmission pathway from inclusive policymaking to sustainable and equitable economic growth. Economy-specific studies, mostly restricted to a specific financial inclusion scheme/initiative, have examined the role of financial inclusion in shaping SDG deliverables, with a particular focus on poverty alleviation and equitable income generation. Also, no empirical exploration has yet been performed to ascertain the role of the policy biases/priorities of central banks in expediting the attainment of sustainable macroeconomic targets. By deploying a fixed-effect panel regression strategy and an instrumental variable technique on 15 major economies in the Asia and Pacific region over a period of 31 years, this study negates the solitary role of FI factors in influencing the changing spectrum of SDG targets. This research further explores Millennium Development Goals (MDGs), SDGs, the Asian financial crisis of 1997, and the global financial crisis of 2008 as policy shocks/interventions and observes their positive contribution in shaping the results of sustainable economic development targets. Further, this study uniquely deploys a natural language processing (NLP) technique on central banks’ annual reports, monetary policy statements, and press releases for the 15 economies from 2000 to 2022 and analyzed 1,815 documents through topic Modeling. This paper concludes that the policy inclination of central banks toward sustainable macroeconomic development has increased over the years and substantially improved with the emergence of policy shocks. With the economy clustering/grouping observed in this exploration, it is evident that the central banks of Asia and Pacific economies have a unidirectional, though heterogeneous, intent to contribute to the broader national objectives of attaining SDGs.
Working Paper 1512