Effect of Financial Inclusion and Stability on Equality, Poverty, and Human Development: An Empirical Analysis in the Context of South Asia

Article Details

Souvik Banerjee, souvik.2005@gmail.com, Management Development Institute Murshidabad, India

Journal: DLSU Business and Economics Review
Volume 30 Issue 1 (Published: 2020-07-01)

Abstract

In this research endeavor, financial inclusion and its impact on three important aspects of human life (i.e., inequality, poverty, and human development) are explored in the south Asian region. Worldwide inequality is catching much attention from the academic community of late. Similarly, the extent of poverty and human development indicators of any country indicates the level of development. The penetration of the bank branch and automated teller machine (ATM) is considered as a proxy for financial inclusion. Long time-series data from 2004 to 2016 is considered for this study. This should be important in addition to the existing literature on these topics. System Generalized method of moments (GMM) is used for the analysis to mitigate the presence of endogeneity, heteroscedasticity as well as serial correlation in the dataset.

Keywords: Financial Inclusion, Inequality, Poverty, Human Development, South Asia

DOI: https://www.dlsu.edu.ph/wp-content/uploads/2020/08/10banarjee.pdf
  References:

Alvaredo, F., and L.& Gasparini, L. (2015)., “Recent trends in inequality and poverty in developing countries.”, iIn Anthony A. B. Atkinson and & François F. Bourguignon (edsEds.), Handbook of income distribution. (Vol. 2A, pp. 697–805). Publisher.

D. Acemoglu, D. (2011)., “Thoughts on inequality and the financial crisis.” Presentation at the American Economic Association Annual Meeting, held on January 7.

Aghion, P., E. Caroli, E., & and C. Garcia-Penalosa, C. (1999)., “Inequality and economic growth: The perspective of the new growth theories.”, Journal of Economic Literature, Vol.37(, No.16), pp.15–60.

Aghion, P., and P.& Bolton, P. (1997).,“ A theory of trickle-down growth and development.”, Review of Economic Studies, Vol.64(x), pp.151–-172.

Allen, F., A. Demirguc-Kunt, A. ,L. Klapper, L., and M.S.& Martinez Peria, M. S. (2016)., “The foundations of financial inclusion: Understanding ownership and use of formal accounts.”, Journal of Financial Intermediation, Vol.27, pp.1–-30.,

Anand, S.and M., & Ravallion, M. (1993)., "Human development in poor countries: on the role of private incomes and public services.", The Journal of Economic Perspectives, Vol. 7(,No.1), pp. 133–-150.

Aportela, F. (1999)., “Effects of financial access on savings by low-income people.” Banco De México, Research Department.

Banerjee, A. V., and A.F.& Newman, A. F. (1993).,“ Occupational choice and the process of development.”, Journal of Political Economy, Vol. 101(x),pp. 274–-298.

Bardhan , P. K. (2005).,” Scarcity, conflicts, and cooperation: essays in the political and institutional economics of development.``. cambridge, Massachusetts: MIT Press.

Beck, T., and A.& Demirguc-Kunt, A. (2006)., “Small and medium-sized enterprises: Access to Finance as a growth constraint.”, Journal of Banking and Finance, Vol.30(, No.11), pp.2931–- 2943.

Beck, T., A. Demirgüc¸ -Kunt, A., & and R. Levine, R. (2007).,” Finance, Inequality, and the poor.” Journal of Economic Growth, Vol.12, pp.27–49.

Bourguignon, F., & and S. Dessus, S. (2009)., “Equity and dDevelopment: Political economy considerations.”, iIn S. Levy and & M. Walton (edsEds.), No growth without equity? Inequality, interests, and competition in Mexico, (pp.45–70). Washington: World Bank/Palgrave MacMillan, pp.45-70.

Bruhn, M., and I.& Love, I. (2014).,” The real impact of improved access to finance: eEvidence from Mexico.”, Journal of Finance, Vol.69(x), pp.1347–1376.

Burgess, R., and R.& Pande, R. (2005)., “Do rural banks matter? Evidence from the Indian social banking experiment.”, American Economic Review,. Vol.95(x), pp.780–795.

Cappelen, A., D. H.Astri, S. Erik, and B.& Tungodden, B. (2007)., “The pluralism of fairness ideals: An experimental approach.”, American Economic Review, Vol.97, No.(3), pp.818– 827.

Cappelen, A., K. James, K., S. Erik, and B. Tungodden (2013)., “Just luck: An experimental study of risk-taking and fairness.”, American Economic Review, Vol.103(,No.4), pp.1398–1413.

Cingano, F. (2014).,“ Trends in income inequality and its impact on economic Ggrowth”, (OECD Social Employment and Migration Working Papers No. 163)., OECD Publishing.

Claessens, S., and E.& Perotti, E. (2007)., “Finance and inequality: Channels and evidence.”, Journal of Comparative Economics, Vol. 35(, No.4), pp.748–773.

Clarke, G. and Cull, R. (2002), “Political and Economic Determinants of the Likelihood of Privatizing Argentine Public Banks, Journal of Law and Economics”, Vol. 45, pp.165-197.

Collard, S. (2010).,“ Toward financial inclusion in the UK: Progress and challenges.”, Public Money Management, Vol. 27(, No.1), pp.13–20.

Demirguc-Kunt, A., and R.& Levine, R. (2009)., “Finance and inequality: Theory and Evidence.”, Annual Review of Financial Economics, Vol.1, pp.287–318.

Deyshappriya, N. R. R. (2018, July 31).,” Examining poverty trends in South Asian countries: wWhere is Sri Lanka among its South Asian counterparts?”, rRetrieved from https://blogs.lse.ac.uk/southasia/2018/07/31/examining-poverty-trends-in-south-asian-countries-where-is-sri-lanka-among-its-south-asian-counterparts/

Didier, T., M. AyhanKose, FranziskaOhnsorge and Lei Sandy Ye (2015)., “Slowdown in emerging markets: rough patch or prolonged weakness?” (World Bank Group Policy Research Note No. x).,Washington, D.C.: International Monetary Fund (IMF).

Easterlin, R. A. (2000)., "The Worldwide Standard of Living Since 1800.", The Journal of Economic Perspectives, Vol.14(, No.1), pp.7–-26.

Fehr, D. (2018)., “Is increasing inequality harmful? Experimental evidence.”, Games and Economic Behavior, Vol.107,pp.123–-134.

Galor, O., and O.& Moav, O. (2004)., “From physical to human capital accumulation: Inequality and the process of development.” Review of Economic Studies, Vo.71(, No.4), pp.1001–1026.

Galor, O., & and J. Zeira, J. (1993)., “Income distribution and macroeconomics.”, Review of Economic Studies, Vol. 60(x), pp.35–-52.

Himanshu (2018), “India Inequality Report 2018: Widening Gaps.” Oxfam India.

Norton, M., and D.& Ariely, D. (2011).,“ Building a better America—One wealth quintile at a time.” Perspectives on Psychological Science, Vol.6(, No.1), pp. 9–12.

King, R., and R.& Levine, R. (1993)., “Finance and growth: Schumpeter might be right.” The Quarterly Journal of Economics, Vol.108(, No.3), pp.717–-737.

Kempson, E., andWhyley& Whyley, C. (1999).,“ Kept out or opted out? Understanding and combating financial exclusion.” The Policy Press.

Kempson, E. (2006)., “Policy level response to financial inclusion in developed countries: Lessons for developing countries. Paper presented at the Conference on Access to Finance, held in Washington, D.C., on May 30––31.

Konow, J. (2003), “Which Is the Fairest One of All? A Positive Analysis of Justice Theories.” Journal of Economic Literature,Vol.41, No.4, pp.1188–1239.

Kumhof, M., and R.& Rancière, R. (2010)., “Inequality, leverage, and crises.” (IMF Working Paper, No. 10/268)., Washington, D.C.: International Monetary Fund (IMF).

Lewis,R.,Villasenor,J. and West,D.M.(2016). Financial inclusion progress and possibilities in South Asia. Brookings Institute. Retrieved from https://www.brookings.edu/blog/techtank/2016/09/02/financial-inclusion-progress-and-possibilities-in-south-asia/

Leeladhar, V. (2006). Taking banking services to the common man - financial inclusion. Reserve Bank of India Bulletin, (January, Mumbai, Indiax).

Leyshon, A., andN.& Thrift, N. (1993).,“ The restructuring of the U. K. Financial services Industry in the reversal of fortune? “Journal of Rural Studies, Vol. 9(, No.3), pp. 223–241.

Leyshon, A.and N., & Thrift, N. (1994)., Access to financial services and financial infrastructure withdrawal: problems and policies., Area, Vol.26(x), pp.268–275.

Leyshon, A., and N.& Thrift, N. (1995)., “Geographies of financial exclusion: Financial abandonment in Britain and the United States.”, Transaction of Institute British Geographers, Vol. 20( ,No.3), pp.312–341.

Lichbach, M. I. (1989)., “An evaluation of ‘does economic inequality breed political conflict?” World Politics, Vol.41(, No.4), pp.431–470.

Mirrlees, J. A. (1971)An exploration in the theory of optimum income taxation., Review of Economic Studies, Vol.38(x), pp.175–208.

Piketty, T. (1997)., The dynamics of the wealth distribution and the interest rate with credit rationing., Review of Economic Studies, Vol.64(x), pp.173–-189.

Piketty, Thomas T. (2014)., Capital in the twenty-first century, (1st ed.)Edition,. Harvard University Press.

Putnam, R. D. (2000)., Bowling alone: The collapse and Revival of the American Community. (4th Edition,). New York: Simon & Schuster Inc.

Rajan, R. G. (2010). Fault lines. Princeton, New Jersey: Princeton University Press.

Rajan, R., and L.& Zingales, L. (1998)., “Financial dependence and growth.” American Economic Review, Vol.88(, No.3), pp.559–-586.

Sarma, M., and J.& Pais, J. (2008). ,Financial inclusion and development: a cross country analysis.

Shin, I. (2012)., “Income inequality and economic growth.”, Economic Modeling, Vol.29(x), pp.2049–2057.

Ravallion, M. (2004)., “Pro-ppoor growth: a primer”, (Policy Research Working Paper, No. 3242)., Washington D.C.:World Bank.

The Daily Star (2019),”Inequality at all-time high”. Retrieved from https://www.thedailystar.net/frontpage/news/inequality-all-time-high-1745569

Winters, A. L., and A.& Martuscelli, A. (2014).,“ Trade liberalization and poverty: what have we learned in a decade?” Annual Review of Resource Economics, Vol. 6, pp.493–-412.

World Bank. 2015g. Development Goals in an Era of Demographic Change. Global Monitoring Report 2015/2016. Washington, DC: World Bank

  Cited by:
     None...