The Impact of Financial Inclusion on Poverty Reduction in Developing Countries

Articles in Press

Document Type : Original Article

Authors

Fazel Abbas ali Aldalimi ¹

Sajjasd Barkhordari Dorbash ²

¹ پردیس البرز

² دانشکده اقتصاد دانشگاه تهران

https://doi.org/10.22067/mfe.2026.99335.1691

Abstract

The aim of this paper was to examine the impact of financial inclusion on poverty reduction in developing countries. Financial inclusion is the access and use of affordable and quality financial products and services by individuals and firms, including payments, bank accounts, credit, and insurance, that are provided in a sustainable and responsible manner. On the other hand, unequal access to financial resources can be a significant barrier to accessing and using economic opportunities and reduce entrepreneurial activity, which is an important and decisive factor in economic success. In fact, easy access and cost-free use of financial services can help the poor to build capital and assets so that they can better protect themselves in adverse economic conditions. This study used statistical data from 43 developing countries for the period 2004-2025 and the panel vector autoregression method. The results of this study showed that the shock from the financial inclusion index in developing countries led to an improvement in income distribution and a reduction in poverty and inequality. In addition, the model also showed that the shock from the financial inclusion index led to an improvement in income distribution, although the effect of this shock was weak in developing countries.

Keywords

nancial inclusion

poverty

income inequality

panel vector autoregressive model

Subjects

• Financial monetary economy

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