Does Disproportionate Financial Inclusion Reduce Gender and Income-Group Inequality? Global Evidence

Soon Suk Yoon, Ingyu Oh and Shawn S. Park ()
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Soon Suk Yoon: College of Business and Technology, Western Illinois University, 1 University Circle, Macomb, IL 61455, USA
Ingyu Oh: College of Global Engagement, Kansai Gaidai University, 16-1 Nakamiya Higashinocho, Hirakata 573-1195, Osaka, Japan
Shawn S. Park: College of Business Administration, California State University San Marcos, 333 S Twin Oaks Valley Rd., San Marcos, CA 92096, USA

IJFS, 2025, vol. 13, issue 2, 1-25

Abstract: This paper investigates whether countries’ investments in financial inclusion, beyond what their economic capacity would predict, help mitigate gender and income-group gaps in financial opportunities. We construct a novel index, the Abnormal Financial Inclusion Index ( AbFII ), as the residuals from a regression of financial inclusion on GDP per capita to isolate country-specific efforts in advancing financial inclusion. Using data from 100 countries between 2014 and 2021, we find that higher AbFII is associated with lower gender and rich-poor inequalities in financial inclusion, particularly in low-income and high-inequality countries. A one-standard-deviation increase in AbFII corresponds to a 1.2 percentage point reduction in gender and income-group disparities in financial access. We also find that AbFII predicts subsequent improvements in broader gender inequality, especially in reproductive health. The results are robust to various controls and remain consistent under instrumental variable analysis using broadband penetration as an instrument. Our findings suggest that financial inclusion policies exceeding the level expected by economic development can significantly reduce social disparities.

Keywords: financial inclusion; gender inequality; income inequality (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2025
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