The Impact of Financial Inclusion in Poverty Reduction: Empirical Evidence from Emerging Economies

Abstract Poverty is a persistent problem that seems improbable for most developing countries to overcome. This study proposes that financial inclusion has the ability to progressively decrease poverty. The study analyses the association between financial inclusion and poverty in 57 developing countries using data from 2011 to 2017. The analysis employs generalised method of moments (GMM) estimators. The results demonstrate a strong correlation between financial inclusion and poverty, implying that increasing financial inclusion has the potential to reduce poverty levels. Enhanced financial inclusion in developing countries may empower impoverished households to effectively access and employ the services provided by financial institutions. Thus, financial inclusion is an effective tool for alleviating poverty among the underprivileged.