The Impact of Financial Inclusion on Multidimensional Poverty among Females In Malawi

Financial inclusion and multidimensional female poverty are pressing issues globally, and they are especially significant in Malawi. Recent data indicate that both multidimensional poverty (non-monetary) and money-metric poverty remain disproportionately concentrated among females in Malawi. This persists despite numerous government programs aimed at addressing these issues. Although multidimensional poverty has shown a declining trend and financial inclusion has been increasing, women continue to be excluded than men. Previous studies suggest a positive link between financial inclusion and reductions in money-metric poverty. However, this relationship of nonmonetary aka multidimensional poverty, remains insufficiently explored in low-income contexts such as Malawi. Understanding the relationship between them is essential to addressing these challenges effectively. This study assesses the effect of financial inclusion on multidimensional poverty among women. This study utilized data from the Fifth Malawi Integrated Household Survey (IHS5) which included 11,434 households. The survey offers valuable information on economic activities, including household and individual consumption and expenditures. We analyzed females aged 18 and above. We employ the Foster-Alkire method to calculate multidimensional poverty. Furthermore, we conduct bivariate and multivariate analyses to examine the relationship between these two phenomena thoroughly. Our analysis employs Propensity Score Matching to address potential reverse causality selection bias in the observed variables. Specifically, we used propensity score matching (PSM). Robustness test was done using Kernel, nearest neighbour, and the doubly robust estimators (regression adjustments) to validate the results. Among the 23,862 females we analysed, approximately 58% were financially included. Within the financially included group, 53.3% were classified as multidimensionally poor. In contrast, 67.2% of the non-financially included group were identified as multidimensionally poor. Results from the matching estimator suggest financial inclusion reduces multidimensional poverty among females. This indicates that financial inclusion decreases the likelihood of experiencing multidimensional poverty among females by 5.9 percentage points. The findings indicate a need to invest in financial services catering to women. This investment is likely to reduce multidimensional poverty levels among women. Additionally, it is crucial for empowering women, reducing inequality, and eradicating poverty in Malawi.