COVID-19 response needs to broaden financial inclusion to curb the rise in poverty

Mostak Ahamed () and Roxana Gutiérrez-Romero ()
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Mostak Ahamed: University of Sussex Business School, University of Sussex, Brighton, UK.
Roxana Gutiérrez-Romero: School of Business and Management, Queen Mary University of London.

No 105, Working Papers from Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research

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 78 low- and lower-middle-income countries. Unlike other recent cross-country studies, we show that financial inclusion 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. Our forecasts suggest that the world’s population living on less than $1.90 per day could increase from 8% to 14% by 2021, pushing nearly 400 million people into poverty. 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)
JEL-codes: C53 G21 G22 I30 I32 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2020-05
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Citations: View citations in EconPapers (2)

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