 COVID-19 response needs to broaden financial inclusion to curb the rise in povertyRoxana Gutiérrez-Romero and Mostak Ahamed World Development, 2021, vol. 138, issue C Abstract: The ongoing COVID-19 pandemic risks wiping out years of progress made in reducing global poverty. In this paper, we explore to what extent financial inclusion could help mitigate the increase in poverty using cross-country data across 79 low- and lower-middle-income countries. Unlike other recent cross-country studies, we show that financial inclusion, particularly financial outreach, is a key driver of poverty reduction in these countries. This effect is not direct, but indirect, by mitigating the detrimental effect that inequality has on poverty. Our findings are consistent across all the different measures of poverty used and robust to instrumental variables. Our forecasts suggest that by 2021 the world’s population living on less than $5.50 dollars a day would increase by 231 million people, of which nearly 107.8 million people would be pushed into extreme poverty living on less than $1.90 per day. However, urgent improvements in financial inclusion could substantially reduce the impact on poverty. Keywords: Financial inclusion; Poverty; Inequality; COVID-19; Forecasts (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:138:y:2021:i:c:s0305750x20303569 DOI: 10.1016/j.worlddev.2020.105229 Access Statistics for this article World Development is currently edited by O. T. Coomes More articles in World Development from Elsevier |
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