National culture, formal institutions, and financial inclusion: Cross-country evidence from emerging and developing economies

Despite widespread institutional reforms, financial inclusion remains deeply uneven across emerging and developing economies, a paradox that standard governance explanations cannot resolve. We argue that national culture, as a fundamental informal institution, conditions the extent to which improvements in formal institutional quality translate into financial inclusion gains. Using a sample that covers 72 emerging and developing economies over the 2004–2023 period, we find that individualism and masculinity strengthen the positive effect of formal institutions on financial inclusion, while uncertainty avoidance and power distance weaken it. Further analysis reveals that these moderating effects vary across the financial inclusion spectrum: masculinity exerts its strongest amplifying effect at lower inclusion levels while individualism dominates at higher levels, patterns that conventional mean-based estimators cannot detect. Notably, trust functions as a boundary condition: uncertainty avoidance shifts from attenuating to reinforcing institutional effectiveness in high-trust societies, indicating that the direction of cultural moderation depends fundamentally on the prevailing trust environment. The results remain robust for a battery of sensitivity checks, and for confronting endogeneity and omitted variables concerns. These findings position institutional reform as a culturally contingent process, with direct implications for how regulators, banks, and fintech providers should design and sequence reforms across culturally diverse emerging markets.