The impact of banking services on poverty: Evidence from sub-district level for Bangladesh

Does Financial Inclusion Diminish Poverty and Inequality? A Panel Data Analysis for Latin American Countries

“…In this sense, we agree with Vacaflores ( 2018 ) that this encouragement should consider isolated communities, as their isolation makes it difficult to fight poverty (e.g., rural areas with lower levels of financial awareness). Hence, fostering bank outreach to these areas should be an indispensable feature of the poverty-reduction strategy, as indicated by Iqbal et al ( 2020 ) and Munyegera and Matsumoto ( 2016 ). We defend that this process may involve multiple actors (e.g., governments, banks and other financial institutions) to mutually invest in these areas.…”

“…Honohan ( 2008 ) argues that endogeneity should not be a serious problem in models for poverty and inequality, as it would be in growth models. Nonetheless, banks may be particularly interested in expanding their services in developed regions, as they represent stronger demands for finance-related services (Iqbal et al, 2020 ). This would generate endogeneity between the dependent and the finance-related variables.…”

“…Yet, it has no effect on poverty (N'Dri & Kakinaka, 2020 ) Burkina Faso 2016 Lack of nutrition; lack of healthcare; lack of education Use of financial services (dummy); use of mobile money (dummy); age of respondent; gender of the respondent; household size; time-to-market; mobile phone ownership; education; land size; rural area Financial inclusion reduces poverty (i.e., lack of nutrition, education, and healthcare). Moreover, it has a greater impact when individuals have access to digital financial services (i.e., mobile money) (Iqbal et al, 2020 ) Bangladesh 2010–2015 Population in moderate and extreme poverty (%) Branches per 10 km2; accounts per adult; deposits per adult; credit per adult; river erosion; cropping intensity; paved road; high remittance By using a unique dataset of 544 administrative sub districts of Bangladesh, the authors found that financial inclusion decreases both extreme and moderate poverty levels in rural areas (Mushtaq & Bruneau, 2019 ) 62 countries 2001–2012 Poverty headcount ratio; Gini index; Poverty gap; GDP per capita Deposits per head; Borrower ratio; Loans (% GDP); GDP per capita; trade openness; government consumption; inflation; mobile; fixed telephone; internet; price of 3-min local call Results suggest financial inclusion had negative and significant effects on poverty and inequality. Moreover, Information and Communication Technologies (ICT) stimulate financial inclusion, therefore favoring economic growth and reducing poverty and inequality (Demir et al, 2020 ) 140 countries 2011, 2014 and 2017 Gini index Use of mobile phone to pay bills (% population); Accounts (% population); Savings (% population); Borrowers (% population); GDP growth; education; trade openness; government expenditure; inflation; population Financial inclusion reduces inequality at all quantiles of the inequality distribution, and 'FinTech' also reduces income inequality (Park & Mercado, 2017 ) 176 countries 2004–2012 Poverty headcount ratio; Gini index ATMs per 100,000 adults; branches per 100,000 adults; borrowers per 1000 adults; credit (% GDP); depositors per 1000 adults; share of highest to lowest income; inflation; educatio...…”

“…In 2011, the World Bank Group started the first global analysis regarding the demand for financial services. Up to this moment, a multitude of empirical studies are studying the growth of financial inclusion worldwide (Anarfo et al, 2020 ; Kabakova & Plaksenkov, 2018 ; Raichoudhury, 2020 ), its effects on issues such as poverty and inequality (Iqbal et al, 2020 ; Koomson et al, 2020 ; Mushtaq & Bruneau, 2019 ; Ndlovu & Toerien, 2020 ), and many development institutes (e.g., International Monetary Fund—IMF; African Development Bank—AfDB; Asian Development Bank—ADB; Organization for Economic Co-operation and Development—OECD) are funding the research on financial inclusion with the goal of understanding how to bank the unbanked population (Ndlovu & Toerien, 2020 ).…”

South Asia Economic Focus, Spring 2020 : The Cursed Blessing of Public Banks

“…In Bangladesh, where public banks have a better coverage across districts than private ones, bank branch growth has positively affected firms' output and productivity (Hossain, Yoshino, and Taghizadeh-Hesary 2018). In addition, access to banking services is strongly associated with poverty reduction in Bangladesh (Iqbal, Roy, and Alam 2018). However, despite public banks having a much larger branch network and deposit collection in rural areas in India than private banks do, the share of loans to agriculture and to micro, small, and medium enterprises (MSME) -two key targets for improving the incomes of poor and excluded groups -is not very different from that of private banks (Kibuuka and Melecky 2020).…”