Financial Inclusion and Household Welfare: An Entropy-Based Consumption Diversification Approach

Chakrabarty, Manisha; Mukherjee, Subhankar

doi:10.1057/s41287-021-00431-y

Cited by 23 publications

(19 citation statements)

References 46 publications

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“…It was reported that mobile money helped consumers to improve their ability to meet basic living costs and in some cases bounce back from shocks (Ahmed & Cowan, 2021; Koomson et al, 2021; Meneses et al, 2019; Munyegera & Matsumoto, 2016; N'dri & Kakinaka, 2020; Obadha et al, 2020; Peprah et al, 2020; Sakyi‐Nyarko et al, 2021). Similarly, bank account ownership and non‐formal and formal means of saving and borrowing helped households to meet basic living costs such as food and health costs (Arellano et al, 2019; Chakrabarty & Mukherjee, 2021; Dimova & Adebowale, 2018; Gyasi et al, 2019; Habyarimana & Jack, 2018; Hussain et al, 2019; Ibrahim et al, 2019; Iddrisu & Danquah, 2021; Ksoll et al, 2016; Lyons et al, 2020; Prina, 2015; Reyers, 2019; Wiersma et al, 2020). Moreover, in India and Nepal, it was reported that bank account ownership enables households to meet basic living costs and engage in social activities such as religious festivals and ceremonies (Chakrabarty & Mukherjee, 2021; Prina, 2015).…”

Section: Introductionmentioning

confidence: 99%

Quality financial inclusion and financial vulnerability

Chipunza

Fanta

2022

Int J Consumer Studies

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Despite existing evidence suggesting that financial inclusion enhances consumers' welfare, there has been no attempt to examine the link between financial inclusion and financial vulnerability, measured along multiple dimensions. We computed more comprehensive indices of financial vulnerability and financial inclusion using polychoric principal component analysis based on a nationally representative financial inclusion survey in South Africa. Results from quantile regressions show that only the top 20% of the financially included had lower vulnerability but the effect was weaker among the more vulnerable categories. Also, the decline in financial vulnerability was less pronounced when financial inclusion was narrowly defined by excluding quality indicators. These findings suggest that financial inclusion is benefitting a few consumers in South Africa which points to the need for a bottom-up approach in designing financial products that improve the welfare of the financially included consumers.

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Section: Introductionmentioning

confidence: 99%

Quality financial inclusion and financial vulnerability

Chipunza

Fanta

2022

Int J Consumer Studies

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“…Access to finance was also found to influence other key outcomes, such as increasing village-level wages (Fink et al, 2020), improving local output prices by inducing delayed selling (Burke et al, 2018), causing modest business creation and expansion (Angelucci et al, 2015; Banerjee et al, 2015; Meager, 2019), and increasing other expenditures (Quach, 2016). Chakrabarty and Mukherjee (2021) used the Theil’s entropy-based index to disaggregate household consumption expenditure into food and non-food items, finding that financial inclusion does not only lead to positive changes in these items, but it also creates a shift from food items to non-food items across households. In the literature, some studies such as Ofori-Abebrese et al (2020), Hidayat et al (2021), and Gupta et al (2014) used the human development index (HDI) as a measure of welfare.…”

Section: Literature Reviewmentioning

confidence: 99%

The Welfare Effects of Formal and Informal Financial Access in the Gambia: A Comparative Assessment

Manja

Badjie²

2022

Sage Open

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The aim of this study was to comparatively assess the impact of formal and informal finance on household welfare in the Gambia. The Gambia 2015 to 2016 Integrated Household Survey (IHS3) data was analyzed using Stata software version 17.0 to assess the impact of access to the various forms of finance on household food and non-food consumption expenditures, education expenditure, total income, and a subjective assessment of welfare. The study found that access to either formal or informal finance has some deleterious impacts on welfare, with the negative impacts from formal finance being generally lesser than those from informal finance, signaling that the different forms of finance have near-varying repercussions on household welfare. Access to and conditions of formal finance should be improved by removing or making less stringent the requirements, most of which are hard for households to meet.

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“…Recent studies on welfare by Chakrabarty and Mukherjee (2021) use Theil’s entropy-based index to assess consumption expenditure diversification and use it as a way of measuring welfare. Bağçe et al.…”

Section: Literature Reviewmentioning

confidence: 99%

Validating second-order model for economic welfare scale: evidence from Nigeria

Babangida

Hakim

Abdullah

2022

IJSE

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PurposeThe goal of this paper is to validate the second-order model for the economic welfare scale in the context of violence. This study also aims to assess the relationship between the dimensions of the economic welfare scale’ declining food consumption and loss of income and the overall latent construct and assess the second-order model’s goodness of fit using appropriate fit indices.Design/methodology/approachThe study is cross-sectional with a sample of 600 households from the violent zone, Northwest Nigeria. The data collected was used for confirmatory factor analysis, second-order model evaluation and model fit evaluation.FindingsThe second-order model for the economic welfare scale is valid and reliable; the dimensions significantly affect the formation of the overall construct. The model’s goodness of fit fulfilled the relevant fit indices.Research limitations/implicationsThe study offers researchers and policymakers practical insights into how each dimension influences the latent operational construct. It, therefore, encompasses replication in all the remaining modules.Practical implicationsThe findings offer practical insight to policymakers in designing policies for promoting long-term peace structures and developing mechanisms to assist those who have suffered the greatest economic welfare losses due to violence in Nigeria.Social implicationsThe findings form an essential tool to assess the economic welfare effect in violently affected territories at the micro-level.Originality/valueThe outcomes are ground-breaking by validating the second-order model for the economic welfare scale. And established dimension influences over the overall latent variable.

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Financial Inclusion and Household Welfare: An Entropy-Based Consumption Diversification Approach

Cited by 23 publications

References 46 publications

Quality financial inclusion and financial vulnerability

Quality financial inclusion and financial vulnerability

The Welfare Effects of Formal and Informal Financial Access in the Gambia: A Comparative Assessment

Validating second-order model for economic welfare scale: evidence from Nigeria

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