Using several recently available global datasets, this Staff Discussion Note examines macroeconomic effects of financial inclusion. It finds significant benefits to economic growth from financial inclusion, but the benefits diminish as financial inclusion and depth become large. Broadening access to credit can compromise economic and bank stability in countries with weak bank supervision. Other forms of financial inclusion—such as access to and use of bank accounts, branches, and ATMs—do not hurt stability, and can be promoted extensively. The note finds that gaps in financial inclusion are associated with economic inequality, but the association appears relatively weak.

https://www.imf.org/-/media/Websites/IMF/imported-full-text-pdf/external/pubs/ft/sdn/2015/_sdn1517.ashx

Financial Inclusion; Can it Meet Multiple Macroeconomic Goals?

Financial inclusion and energy poverty: Empirical evidence from Ghana

Evaluating energy poverty and its effects using multi-dimensional based DEA-like mathematical composite indicator approach: Findings from Asia

Financial technology as a driver of poverty alleviation in China: Evidence from an innovative regression approach

Does financial inclusion index and energy performance index co-move?

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.

/pdf/does-financial-inclusion-reduce-poverty-and-income-2gr9dsv7gv.pdf

Abdullah Omar

Papers

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

Multidimensional energy poverty in Bangladesh and its effect on health and education: A multilevel analysis based on household survey data