Does financial inclusion reduce poverty and income inequality in developing countries? A panel data analysis

Md Abdullah Omar () and Kazuo Inaba ()
Additional contact information
Md Abdullah Omar: Bangladesh Bank (The Central Bank of Bangladesh)
Kazuo Inaba: Ritsumeikan University

Journal of Economic Structures, 2020, vol. 9, issue 1, 1-25

Abstract: Abstract Financial inclusion is a key element of social inclusion, particularly useful in combating poverty and income inequality by opening blocked advancement opportunities for disadvantaged segments of the population. This study intends to investigate the impact of financial inclusion on reducing poverty and income inequality, and the determinants and conditional effects thereof in 116 developing countries. The analysis is carried out using an unbalanced annual panel data for the period of 2004–2016. For this purpose, we construct a novel index of financial inclusion using a broad set of financial sector outreach indicators, finding that per capita income, ratio of internet users, age dependency ratio, inflation, and income inequality significantly influence the level of financial inclusion in developing countries. Furthermore, the results provide robust evidence that financial inclusion significantly reduces poverty rates and income inequality in developing countries. The findings are in favor of further promoting access to and usage of formal financial services by marginalized segments of the population in order to maximize society’s overall welfare.

Keywords: Financial inclusion; Poverty; Income inequality; Developing countries (search for similar items in EconPapers)
JEL-codes: G21 I32 O11 O15 O16 O53 O54 O55 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (111)

Downloads: (external link)
http://link.springer.com/10.1186/s40008-020-00214-4 Abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jecstr:v:9:y:2020:i:1:d:10.1186_s40008-020-00214-4

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40008

DOI: 10.1186/s40008-020-00214-4

Access Statistics for this article

Journal of Economic Structures is currently edited by Shigemi Kagawa and Kazuhiko Nishimura

More articles in Journal of Economic Structures from Springer, Pan-Pacific Association of Input-Output Studies (PAPAIOS) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().