Financial inclusion and poverty reduction in Asean from 2014 to 2018

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Financial inclusion and poverty reduction in Asean from 2014 to 2018

By Pham Thi Ngoc Mai (VNP 25)

Supervisor: Dr. Nguyen Trong Hoai

Abstract:

Understanding financial inclusion in ASEAN may help reduce poverty as well as foster economic growth. The aim of this research is to investigate the impact of financial inclusion on poverty in the region during the period 2004-2018. The paper finds that access to the banking system could reduce poverty in ASEAN and it is also an important key to resolve the poor. Both Ordinary Least Square (OLS), Fixed effect (FE) and Generalized Method of Moments (GMM) techniques are used to examine the relationship. The results show that the outreach of ATMs could help reduce poverty rate and have consistent results in OLS and GMM, while outreach of bank branches does not. In developing countries, it seems that the number of bank branches per 100,000 adults may be not large, but have the widespread distribution of ATMs, so people can get access quickly. In addition, ATMs are cheaper to install and may provide greater penetration in both urban and rural areas and people are easy to access with smaller distance that leads to reach the poorer segments. That why an increase of ATMs per 100,000 adults induces decrease of poverty rate and it is also an effectively channel to ensure access to financial services. Therefore, the paper provides more evidence to prove access is a key to reduce the poverty rate through banking system, particularly, demographic of ATMs.

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Pham Thi Ngoc Mai_VNP25_2020.pdf

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