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COVID-19 response needs to broaden financial inclusion to curb the rise in poverty
journal contribution
posted on 2023-06-09, 22:07 authored by Roxana Gutiérrez-Romero, Mostak AhamedMostak AhamedThe ongoing COVID-19 pandemic risks wiping out years of progress made in reducing global poverty. In this paper, we explore to what extent financial inclusion could help mitigate the increase in poverty using cross-country data across 79 low- and lower-middle-income countries. Unlike other recent cross-country studies, we show that financial inclusion, particularly financial outreach, is a key driver of poverty reduction in these countries. This effect is not direct, but indirect, by mitigating the detrimental effect that inequality has on poverty. Our findings are consistent across all the different measures of poverty used and robust to instrumental variables. Our forecasts suggest that by 2021 the world’s population living on less than $5.50 dollars a day would increase by 231 million people, of which nearly 107.8 million people would be pushed into extreme poverty living on less than $1.90 per day. However, urgent improvements in financial inclusion could substantially reduce the impact on poverty.
History
Publication status
- Published
File Version
- Accepted version
Journal
World DevelopmentISSN
0305-750XPublisher
ElsevierExternal DOI
Volume
138Page range
1-37Article number
a105229Pages
37.0Department affiliated with
- Accounting and Finance Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2020-11-10First Open Access (FOA) Date
2022-10-23First Compliant Deposit (FCD) Date
2020-11-18Usage metrics
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