Unlocking Opportunity: The Nexus Between Financial Inclusion and Poverty Reduction in Asian Economies

This study investigates the influence of financial inclusion (FIC) on poverty alleviation in various Asian economies from 2000 to 2023. It emphasizes the role of enhanced access to financial services in reducing poverty levels, employing Cross-Sectional Autoregressive Distributed Lag (CS-ARDL). This approach was selected for its effectiveness in addressing cross-sectional dependence, providing robust long-term and short-term estimates, and managing potential endogeneity issues. The results reveal a significant negative correlation between FIC and poverty levels, indicating that improved access to financial services is associated with lower poverty rates across the studied economies. This relationship can be attributed to several factors: FIC enhances individuals' capacity to manage financial risks, invest in essential human capital, i.e., education and healthcare, and encourages entrepreneurial endeavors. Inclusive financial systems bolster economic resilience and create opportunities for marginalized groups to generate income by facilitating access to savings, credit, and financial education. The findings suggest that policymakers should prioritize expanding access to financial services for underserved populations. This strategy empowers individuals, contributes to poverty reduction (PVT), and stimulates economic growth. The originality of this research lies in its focus on the long-term effects of FIC, providing valuable facts on how it can be integrated into broader PVT strategies. JEL Codes: I32; O15