This study examines the relationship between financial inclusion and economic growth, focusing specifically on the role of financial sector development in South Asia. The research encompasses annual data from five developing economies in South Asia: Bangladesh, India, Pakistan, Nepal, and Sri Lanka, during the period from 2000 to 2024. Multidimensional indicators of financial inclusion, economic growth, and financial sector development were generated using principal component analysis, while the panel autoregressive distributed lag–pooled mean group technique was applied to evaluate both long-run and short-run dynamics. The findings indicate that growth of the financial sector contributes significantly to economic development, providing its position as a major force behind economic expansion. The results suggest that financial sector development may represent a potential transmission channel linking financial inclusion and economic growth. The study highlights the importance of strengthening inclusive financial systems and financial sector institutions to achieve sustainable economic growth in South Asia, and offers policy recommendations for enhancing financial access, financial literacy, innovation, and financial market efficiency.
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