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Impacts Of Financial Inclusion On Poverty And Income Inequality In Developing Asia

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  • WARATTAYA CHINNAKUM

    (Faculty of Economics, Chiang Mai University, Chiang Mai 50200, Thailand)

Abstract

This study investigates the impacts of financial inclusion on poverty and income inequality in 27 developing countries in Asia during 2004–2019 based on a composite financial inclusion index (FII) constructed using principal component analysis (PCA). The generalized method of moments (GMM) was employed for the estimation. The results show that financial inclusion can influence the reduction in both poverty and income inequality. The empirical findings also reveal the contribution of such control variables as economic growth in decreasing income disparity and trade openness in helping improve the standard of living of poor households despite its tendency to co-vary with income inequality. The present empirical evidence supporting the role of financial inclusion in reducing poverty and income inequality in developing countries has led to a policy implication that financial sector development should focus on the availability, usage, and depth of credit to cover all poor households or low-income groups to help improve their access to financial services, enable them to increase their income, and reduce the income gap between poor and rich households.

Suggested Citation

  • Warattaya Chinnakum, 2023. "Impacts Of Financial Inclusion On Poverty And Income Inequality In Developing Asia," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(04), pages 1375-1391, June.
    • Handle: RePEc:wsi:serxxx:v:68:y:2023:i:04:n:s0217590822440027
    DOI: 10.1142/S0217590822440027
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    More about this item

    Keywords

    Financial inclusion; poverty; income inequality; developing countries; Asia;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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