Financial inclusion and well-being- is it demand-following or supply-leading

A two-way association can be established between financial inclusion and well-being. On the one hand, financial inclusion promotes well-being (supply-leading hypothesis), while an increase in well-being facilitates the generation of demand for financial products and services (demand-following hypothesis). This study attempts to objectively assess the significance of the demand-following and supply-leading hypotheses in the context of different-income economies to fill such gaps in the existing literature. It aims to investigate the evolving nature of financial inclusion and well-being (only physical dimensions) and establish an empirical relationship between the two. The canonical correlation technique is used to provide empirical evidence, and the supply-leading hypothesis holds for high-income counties. However, the demand-following approach is more effective than the supply-leading approach in middle-income and low-income countries. As the demand-following hypothesis is gaining momentum, policy efforts to raise the demand for financial products and services through financial literacy is vital, as are collaboration and investments to improve quality of life.