Financial Inclusion and Poverty Reduction in Sub-Saharan Africa

Abstract

Financial inclusion is the provision of financial services to low-income earners. Despite the proposition in the theoretical literature that financial inclusion can bring a lot of welfare benefits to the poor, empirical investigation and conclusion to that effect are rather scanty. This paper sheds light on the potential impact that financial inclusion has on poverty reduction among low-income individuals using 35 Sub-Saharan African countries. We employ the treatment effect model and propensity score matching techniques. Our results suggest that the poor who are financially included derives net wealth benefit and larger welfare benefit than those who are not financially included.