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Financial Inclusion, Poverty, And Income Inequality

Author

Listed:
  • CYN-YOUNG PARK

    (Asian Development Bank, 6 ADB Ave, Ortigas Center, Mandaluyong, 1550 Metro Manila, Philippines)

  • ROGELIO MERCADO

    (#x2020;Macroeconomics and Monetary Policy Division, The SEACEN Centre, Sesana Kijang, Kuala Lumpur, Malaysia)

Abstract

This paper extends the existing literature on financial inclusion by analyzing the factors affecting financial inclusion and assessing the impact of financial inclusion on poverty and income inequality in the world and Asia. We construct a new financial inclusion indicators to assess various macroeconomic and country-specific factors affecting the degree of financial inclusion for 176 economies, including 37 of which from developing Asia. We test the impact of financial inclusion, along with other control variables, on poverty and income inequality. We do so for full sample of countries and then for developing Asia sample to access which factors are relevant for full sample and for developing Asia specifically. The estimation results show that per capita income, rule of law, and demographic characteristics significantly affect financial inclusion for both world and Asia samples. However, primary education completion and literacy significantly increases financial inclusion only in the full sample, not for the Asian sample. The findings also indicate that financial inclusion is significantly correlated with lower poverty and income inequality levels for the full sample. For developing Asia, however, there appears to be no link between financial inclusion and income inequality.

Suggested Citation

  • Cyn-Young Park & Rogelio Mercado, 2018. "Financial Inclusion, Poverty, And Income Inequality," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(01), pages 185-206, March.
    • Handle: RePEc:wsi:serxxx:v:63:y:2018:i:01:n:s0217590818410059
    DOI: 10.1142/S0217590818410059
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    References listed on IDEAS

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