Analyzing the effects of financial inclusion on poverty and income inequality in SAARC developing nations

Abstract

The growing issue of poverty and inequitable income distribution is a prevalent concern in many economies across the globe. It acts as an impediment to economic development, especially in the developing world. This study aims to explore the impact of financial inclusion on poverty and income-inequality in five SAARC countries (2004–2021). The FMOLS estimator is used in the case of individual country analysis, whereas, the fixed-effects, and GMM, approaches are implemented in the case of panel data. The empirical estimates from both individual countries and panel data analysis reveal that financial inclusion contributes to mitigating income inequality and poverty. The empirical findings emphasize that bolstering an inclusive financial system is crucial for lowering poverty and income-inequality, thereby achieving SDG 01 and SDG 10 . The research explicitly highlights the central role of encouraging, expanding, and promoting financial inclusion in SAARC economies as the core driver for lowering poverty and income disparities. Therefore, policymakers need to focus on the expansion of the financial sector development and improving access to financial services to benefit a larger segment of the population.