Financial inclusion, shocks and coping strategies: survey evidence from Uganda

Abstract

PurposeThe purpose of this paper is to investigate the roles that access formal and informal finance as well as mobile money play in facilitating the choice of coping strategies that households adopt.Design/methodology/approachThe research methodology considers the estimation of binary outcome maximum likelihood probit models for each coping strategy on a vector of covariates that include measures of financial inclusion, household characteristics and community variables.FindingsThe author finds that financial inclusion is associated with a higher likelihood of adopting market-oriented strategies such as selling assets or borrowing and lower likelihood for non-market strategies such as reliance on informal networks and reducing consumption.Originality/valueTo the best of the author’s knowledge, this paper provides the first empirical attempt examining the pathways through which financial inclusion may facilitate the choice of coping strategies using nuanced household data.