Table.1 An Empirical Study on Financial Inclusion and Poverty Reduction
Author (s)
|
Study Area
(Countries/States)
|
Data Sources
|
Major Findings
|
Churchill and Marisetty, (2020)
|
India
|
Cross-sectional secondary data
|
Financial inclusion has strong poverty alleviate effect.
|
Bukari, et al, (2020)
|
Ghana
|
Cross-sectional secondary data
|
Financial products and services have strong effect on poverty reduction.
|
Koomson et al, (2020)
|
Ghana
|
Cross-sectional secondary data
|
Financial inclusion has negative effect on household poverty.
|
Cavoli et al., (2020)
|
India
|
Secondary data
|
Financial inclusion has significant effect on poverty reduction.
|
Ahmeda, et al., (2016)
|
Bangladesh
|
Cross-sectional secondary data
|
Financial inclusion reducing rural poverty in Bangladesh.
|
Inoue, (2018)
|
Indian States and union territories
|
Secondary data
|
Financial inclusion and financial deepening through public sector banks have a significant effect on poverty reduction in India.
|
Lal, (2018)
|
Three Indian states (J &K, Himachal Pradesh and Punjab)
|
Primary data
|
Financial inclusion through cooperative banks has a direct and significant effect on poverty reduction.
|
Park and Mercado, (2017)
|
Cross-country Analysis
|
Secondary data
|
Financial inclusion has a significant correlation with lower poverty and income inequality.
|
Khaki and Sangmi, (2017)
|
Kashmir Valley (India)
|
Primary data
|
Access to finance through the participation of SGSY has a significant effect on multidimensional poverty reduction, except the education of children.
|
Zhang and Posso, (2017)
|
China
|
Primary data
|
Financial inclusion helps to reduce poverty and improve income inequality by raising household income.
|
Inoue (2011)
|
Indian States and union territories
|
Secondary data
|
Both access to and usages of financial services have helped to reduce poverty in both rural and urban India.
|
Burgess et al., (2005a;2005b)
|
Indian states
|
Secondary data
|
Rural bank branch expansion through social banking programme has significant effect on rural poverty, especially among the lower caste and tribal households.
|
Source: Prepared by the authors
Table.2 Description of Variables
Variables
|
Explanation
|
Sources
|
Dependent variables
|
Poverty headcount ratio
% of people below the poverty line in rural areas
% of people below the poverty line in urban areas
|
NITI Aayog, Government of India
|
Pov
R_Pov
U_Pov
|
Independent variables
(FII)
|
(a) No. of bank branches in proportion to 1000 population
(b) No. of bank employees as the ratio of bank branches
(c) No. of deposit bank account in proportion to 1000 population
(d) No. of credit bank accounts in proportion to 1000 population
(e) Amount of deposit as a per percent of state GDP
(f) Amount of credit as a per percent of state GDP
|
Basic Statistical Return, RBI
|
Control Variables
|
(a) Log of state-wise social sector expenditure
(b) State-wise per capita state domestic product (SDP)
(c) State-wise rural population
(d) Log of capital receipt
|
a. NITI Aayog
b. CMIE data
(c,d) Handbook of statistics on India states
|
Source: Prepared by the Authors
Table 3. Status of Financial Inclusion across the States over the Years
State
|
1993
|
Rank
|
2001
|
Rank
|
2015
|
Rank
|
Haryana
|
26.97683
|
5
|
23.26115
|
6
|
54.41994
|
6
|
Himachal Pradesh
|
26.0737
|
6
|
25.15859
|
5
|
50.87011
|
8
|
Jammu & Kashmir
|
21.9785
|
8
|
23.07755
|
7
|
49.88385
|
9
|
Punjab
|
37.60291
|
4
|
34.56425
|
2
|
61.54774
|
4
|
Rajasthan
|
14.6027
|
15
|
12.89559
|
16
|
30.83058
|
18
|
Uttar Pradesh
|
9.539031
|
23
|
6.977314
|
26
|
12.65495
|
28
|
Arunachal Pradesh
|
13.97031
|
18
|
10.84255
|
21
|
20.59341
|
23
|
Assam
|
13.74318
|
19
|
12.60687
|
18
|
32.66097
|
17
|
Manipur
|
6.918663
|
25
|
5.16338
|
28
|
20.15459
|
25
|
Meghalaya
|
17.3532
|
12
|
13.18883
|
14
|
27.86725
|
20
|
Mizoram
|
11.797
|
21
|
8.261193
|
22
|
35.61518
|
16
|
Nagaland
|
7.604094
|
24
|
5.718008
|
27
|
20.16395
|
24
|
Tripura
|
18.13729
|
11
|
16.74882
|
10
|
53.52673
|
7
|
Sikkim
|
11.19629
|
22
|
11.45765
|
19
|
41.69923
|
11
|
Bihar
|
14.36706
|
16
|
8.108157
|
23
|
17.84848
|
26
|
Odisha
|
12.49038
|
20
|
12.6237
|
17
|
40.7244
|
12
|
West Bengal
|
24.72923
|
7
|
21.89586
|
8
|
45.92991
|
10
|
Madhya Pradesh
|
19.25023
|
10
|
11.21049
|
20
|
29.68482
|
19
|
Andhra Pradesh
|
14.2189
|
17
|
13.15901
|
15
|
25.80539
|
22
|
Karnataka
|
16.15218
|
14
|
14.37178
|
13
|
37.3863
|
14
|
Kerala
|
39.00592
|
3
|
34.34499
|
4
|
71.1657
|
3
|
Tamil Nadu
|
19.55773
|
9
|
19.08693
|
9
|
59.73001
|
5
|
Gujrat
|
16.70837
|
13
|
14.80828
|
12
|
36.94587
|
15
|
Maharashtra
|
39.98575
|
2
|
34.43052
|
3
|
91.05867
|
1
|
Goa
|
65.41975
|
1
|
55.69504
|
1
|
87.30442
|
2
|
Uttarakhand
|
N/A
|
|
6.997807
|
25
|
14.53171
|
27
|
Jharkhand
|
N/A
|
|
16.15691
|
11
|
37.54776
|
13
|
Chhattisgarh
|
N/A
|
|
7.553125
|
24
|
26.8673
|
21
|
N/A: Refers to the new states which formed in 2001. Hence, Financial Inclusion ranks are not calculated for the year 1993.
Table 4a. Results of Overall Sample-Financial Inclusion and Poverty Reduction Dependent Variable: Poverty (HCR)
Variable
|
FE
Model_1
|
RE
Model_2
|
PCSE
Model_3
|
FGLS
Model_4
|
HTR_RE
Model_4
|
FII
|
-0.0074***
(0.0026)
|
-0.0119***
(0.0027)
|
-0.0119***
(0.0030)
|
-0.0119***
(0.0027)
|
-0.0215***
(0.0044)
|
SSE
|
0.2149***
(0.0676)
|
-0.2425***
(0.0515)
|
-0.2425***
(0.0565)
|
-0.2425***
(0.0510)
|
-0.3670***
(0.0622)
|
PCSGDP
|
-69.3727***
(11.7799)
|
-2.7659
(10.0785)
|
-2.7659
(8.6362)
|
-2.7659
(9.9887)
|
-39.2303***
(12.9543)
|
R_POP
|
0.01523
(0.0122)
|
0.0416***
(0.0125)
|
0.0416***
(0.0094)
|
0.0416***
(0.0124)
|
0.0503
(0.0463)
|
CR
|
-0.0227
(0.0469)
|
0.1180***
(0.0443)
|
0.1180*
(0.0545)
|
0.1180***
(0.0439)
|
-0.0821*
(0.0406)
|
North
|
-0.5264***
(0.1048)
|
-0.5472***
(0.1141)
|
-0.5472***
(0.1063)
|
-0.5472***
(0.1131)
|
-4.0989***
(0.4411)
|
North-East
|
0.2509*
(0.1226)
|
0.2419*
(0.1228)
|
0.2419*
(0.1354)
|
0.2419*
(0.1217)
|
1.0488
(0.6498)
|
East
|
0.0690
(0.1099)
|
0.0126
(0.1199)
|
0.0126
(0.0749)
|
0.0126
(0.1189)
|
0.0532
(0.7059)
|
South
|
-0.3285***
(0.1129)
|
-0.1322
(0.1209)
|
-0.1322
(0.1049)
|
-0.1323
(0.1199)
|
-4.4929***
(0.5448)
|
West
|
-0.6596***
(0.1330)
|
-0.3076*
(0.1398)
|
-0.3076***
(0.0683)
|
-0.3076*
(0.1385)
|
-4.4693***
(0.5771)
|
C
|
1.4291***
(0.4104)
|
4.5841***
(0.2752)
|
4.5841***
(0.3597)
|
4.5841***
(0.2728)
|
6.4884***
(0.6799)
|
Obs.
|
620
|
620
|
620
|
620
|
620
|
R-squared
|
0.6896
|
0.7948
|
0.2589
|
|
|
F-statistics
|
19.07
|
|
|
|
|
Prob. (F-statistics)
|
0.0000
|
|
|
|
|
Wald chi2
|
|
212.76
|
214.23
|
216.61
|
224.30
|
Prob > chi2
|
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
Log likelihood
|
|
|
|
-554.7552
|
|
Hausman test
|
|
102.55***
(0.0000)
|
|
|
|
No. of States
|
28
|
28
|
28
|
28
|
28
|
Source: Authors Estimation
Table 4b. Financial Inclusion and Rural Poverty Dependent Variable: Rural Poverty (R_Pov)
Variable
|
FE
Model_1
|
RE
Model_2
|
PCSE
Model_3
|
FGLS
Model_4
|
HTR_RE
Model_5
|
FII
|
-0.0160***
(0.0023)
|
-0.0171***
(0.0023)
|
-0.0171***
(0.0020)
|
-0.0171***
(0.0023)
|
-0.0051
(0.0038)
|
SSE
|
0.3036***
(0.0591)
|
0.1069**
(0.0469)
|
0.1028*
(0.0528)
|
0.1028**
(0.0440)
|
-0.1292**
(0.0513)
|
PCSGDP
|
-10.5751
(10.3002)
|
-47.4022***
(8.7862)
|
-54.0629***
(10.8542)
|
-54.0629***
(8.6175)
|
-33.6174***
(10.8856)
|
R_POP
|
0.0005
(0.0106)
|
0.0201*
(0.0106)
|
0.0256*
(0.0130)
|
0.0256**
(0.0107)
|
0.0741**
(0.0301)
|
CR
|
-0.0237
(0.0411)
|
-0.0046
(0.0393)
|
-0.0393
(0.0448)
|
-0.0393
(0.0378)
|
-0.0337
(0.0345)
|
North
|
-0.8062***
(0.0916)
|
-0.8019***
(0.0952)
|
-0.7882***
(0.0384)
|
-0.7882***
(0.0976)
|
-1.1857***
(0.3505)
|
North-East
|
-0.1449
(0.1072)
|
-0.1187
(0.1038)
|
-0.1822***
(0.0537)
|
-0.1821*
(0.1049)
|
-0.7129*
(0.3522)
|
East
|
-0.0129
(0.0961)
|
-0.0355
(0.0999)
|
-0.0331
(0.0395)
|
-0.0331
(0.1025)
|
-0.3020
(0.3787)
|
South
|
-0.8363***
(0.0987)
|
-0.7152***
(0.1011)
|
-0.6795***
(0.0351)
|
-0.6795***
(0.1034)
|
-0.9407***
(0.3759)
|
West
|
-0.5364***
(0.1163)
|
-0.3627***
(0.1175)
|
-0.32229***
(0.0907)
|
-0.3223***
(0.1194)
|
-0.97847**
(0.4071)
|
C
|
1.3512***
(0.3588)
|
3.0168***
(0.2569)
|
3.3401***
(0.2499)
|
3.3401***
(0.2354)
|
5.1623***
(0.4329)
|
Obs.
|
620
|
620
|
620
|
620
|
620
|
R-squared
|
0.5564
|
0.6071
|
0.5437
|
|
|
F-statistics
|
73.63
|
|
|
|
|
Prob. (F-statistics)
|
0.0000
|
|
|
|
|
Wald chi2
|
|
702.25
|
4336.69
|
738.61
|
277.48
|
Prob > chi2
|
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
Log likelihood
|
|
|
|
-463.2094
|
|
Hausman test
|
|
|
73.75***
(0.0000)
|
|
|
No. of States
|
28
|
28
|
28
|
28
|
28
|
Source: Authors Estimation
Table 4c. Financial Inclusion and Urban Poverty Dependent Variable: Urban Poverty (U_Pov)
Variable
|
FE
Model_1
|
RE
Model_2
|
PCSE
Model_3
|
FGLS
Model_4
|
HTR_ RE
Model_5
|
FII
|
-0.0175***
(0.0027)
|
-0.0179***
(0.0027)
|
-0.0184***
(0.0026)
|
-0.01843***
(0.0027)
|
-0.0198***
(0.0048)
|
SSE
|
-0.0354
(0.0712)
|
-0.0089
(0.0552)
|
0.0272
(0.0656)
|
0.0272
(0.0524)
|
0.1600*
(0.0649)
|
PCSGDP
|
-47.6879***
(12.4150)
|
-50.7474***
(10.3537)
|
-53.8692***
(13.1481)
|
-53.8693***
(10.2529)
|
-82.3357***
(13.7542)
|
R_POP
|
0.0538***
(0.0128)
|
0.0526***
(0.0125)
|
0.0503***
(0.0127)
|
0.0503***
(0.0127)
|
0.0207
(0.0388)
|
CR
|
-0.0230
(0.0495)
|
-00.0500
(0.0464)
|
-0.0808
(0.0632)
|
-0.0808*
(0.0450)
|
-0.1157**
(0.0435)
|
North
|
-0.8015***
(0.1104)
|
-0.7837***
(0.1123)
|
-0.7619***
(0.1184)
|
-0.7619***
(0.1162)
|
-1.3778*** (0.3389121)
|
North-East
|
-1.2557***
(0.1292)
|
-1.2653***
(0.1223)
|
-1.2689***
(0.1853)
|
-1.2689***
(0.1249)
|
0.9747***
(0.3071)
|
East
|
-0.3421***
(0.1159)
|
-0.3341***
(0.1179)
|
-0.3237***
(0.0871)
|
-0.3237**
(0.1220)
|
1.6847*** (0.4043)
|
South
|
-0.3458***
(0.1189)
|
-0.3319***
(0.1192)
|
-0.3189***
(0.0798)
|
-0.3189**
(0.1230)
|
-1.5267*** (0.4105)
|
West
|
-0.2006
(0.1403)
|
-0.1696
(0.1385)
|
-0.1338
(0.1413)
|
-0.1338
(0.1422)
|
-2.1625*** (0.4254)
|
C
|
4.1656***
(0.4325)
|
4.1690***
(0.3025)
|
4.1279***
(0.3806)
|
4.1279***
(0.2800)
|
3.5993***
(0.5555)
|
Obs.
|
620
|
620
|
620
|
620
|
620
|
R-squared
|
0.6138
|
0.6210
|
0.4952
|
|
|
F-statistics
|
50.93
|
|
|
|
|
Prob. (F-statistics)
|
0.0000
|
|
|
|
|
Wald chi2
|
|
559.69
|
946.75
|
608.19
|
312.92
|
Prob > chi2
|
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
Log likelihood
|
|
|
|
-570.9424
|
|
Hausman test
|
|
6.85
(0.6525)
|
|
|
|
No. of States
|
28
|
28
|
28
|
28
|
|
Source: Authors Estimation