The Health Benefits of Financial Inclusion: Evidence from ASEAN

The impact of financial inclusion on health have largely remained underexplored in the existing literature, particularly in the ASEAN nations. This study is conducted to examine this impact using a sample of 14,815 observations collected from (i) the Gallup World Poll and the (ii) the World Bank Global Findex databases. Various estimation techniques, including (i)Lewbel’s (2012) IV estimations, and mediation analysis are utilized in this study. The empirical results indicate that financial inclusion positively affects health outcome, proxied by the Personal Health Index. Our mediation analysis confirms that income, education, food, and housing security emerge as key mediating channels through which financial inclusion improves health. The positive impact from financial inclusion on health outcome remains robust after accounting for a between-country variation using multilevel modeling and addressing potential endogeneity using Lewbel’s instrumental variable estimation. A country-specific analysis confirms that financial inclusion significantly improves health outcome in five ASEAN countries, including Singapore, Thailand, Indonesia, the Philippines, and Myanmar.