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Financial Inclusion as a Pathway to Poverty Alleviation and Equality in Latin America: An Empirical Analysis

Author

Listed:
  • Jeniffer Rubio

    (Centro de Investigaciones Económicas y Empresariales, Universidad de las Américas, Quito 170124, Ecuador)

  • Micaela León

    (Centro de Investigaciones Económicas y Empresariales, Universidad de las Américas, Quito 170124, Ecuador)

Abstract

This study examines the impact of financial inclusion (FI) on reducing poverty and income inequality in Latin America and the Caribbean (LAC), using panel data from 15 countries for the period 2004–2021. System GMM with robust errors was used to address endogeneity issues, and FI was assessed in terms of access to and use of the financial system. The results indicate that increased FI contributes to reducing poverty and income inequality in LAC. While access to financial services plays a crucial role in poverty reduction, the utilization of financial services has a more profound impact on combating income inequality. These results underscore the importance of policies designed to improve financial access and promote the use of financial products and services. It is recommended to expand the banking infrastructure, facilitate the provision of low-cost accounts, and strengthen financial education programs.

Suggested Citation

  • Jeniffer Rubio & Micaela León, 2025. "Financial Inclusion as a Pathway to Poverty Alleviation and Equality in Latin America: An Empirical Analysis," JRFM, MDPI, vol. 18(7), pages 1-22, July.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:7:p:392-:d:1702374
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    References listed on IDEAS

    as
    1. Ms. Izabela Karpowicz, 2014. "Financial Inclusion, Growth and Inequality: A Model Application to Colombia," IMF Working Papers 2014/166, International Monetary Fund.
    2. Kim, Dong-Hyeon & Lin, Shu-Chin, 2023. "Income inequality, inflation and financial development," Journal of Empirical Finance, Elsevier, vol. 72(C), pages 468-487.
    3. Steven Cassimon & Alessandro Maravalle & Alberto González Pandiella & Lou Turroques, 2022. "Determinants of and barriers to people’s financial inclusion in Mexico," OECD Economics Department Working Papers 1728, OECD Publishing.
    4. Sumanta Kumar Saha & Jie Qin, 2023. "Financial inclusion and poverty alleviation: an empirical examination," Economic Change and Restructuring, Springer, vol. 56(1), pages 409-440, February.
    5. Xuan T. T. Pham & Thu B. Luu, 2024. "Effect of FinCredit on income inequality: the moderating role of financial inclusion," Review of Quantitative Finance and Accounting, Springer, vol. 62(3), pages 953-969, April.
    Full references (including those not matched with items on IDEAS)

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