Digital Financial Incluison for Poverty allivation and for Income Inequality in Emerging Markets
Journal Title: IOSR journal of Business and Management - Year 2018, Vol 20, Issue 1
Abstract
The global digital finance creates new enablers for development impact on poverty alleviation and inequalities at the macro, meso, and micro levels. The technology will change the country’s appetite for digital financial services as well as the numerous crosscutting development themes across the ecosystem. Digital Financial Inclusion is often considered an effective tool that can help reduce poverty that makes growth inclusive can enable economic agents to make longer-term consumption and investment decisions.Digital Financial Services (DFS) with the prospect of alleviation of poverty and reaching billions of financially excluded and underserved populations, building on the digital approaches that have been used for years to improve access channels for those already served by the formal financial sector. But poverty remains a persistent challenge across the countries with evidence pointing to worsening income equality in recent years. Most importantly, understanding the link between digitial financial inclusion, poverty, and income inequality at the country level will help policymakers design and implement programs that will broaden access to financial services, leading to reduction of poverty incidence and income equality. This paper extends the existing literature on financial inclusion by focusing on developing Asian economies. We construct our own financial inclusion indicator to assess various macroeconomic and country-specific factors affecting the degree of financial inclusion for 37 selected developing Asian economies. We also test the impact of financial inclusion, along with other control variables, on poverty and income inequality. Our results show that per capita income, rule of law, and demographic characteristics significantly affect digital financial inclusion in developing Asia. Furthermore, we find that digital financial inclusion significantly reduces poverty; and there is also evidence that it lowers income inequality. Our findings suggest that the provisions for young and old-age populations, e.g., retirement pensions; and stronger rule of law, including enforcement of financial contracts and financial regulatory oversight, will broaden financial inclusion, thereby contributing to poverty reduction and lower income inequality.
Authors and Affiliations
Dr. Nageswara Rao Dara
Keywords
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- EP ID EP409529
- DOI 10.9790/487X-2001053141.
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