Exploring the Channels of Financial Inclusion’s Impact on Poverty Reduction in Sub-Saharan Africa
There is no doubt that Sub-Saharan Africa (SSA) is home to many financially excluded persons, and the sub-region accounts for a high proportion of the world’s poor. Despite the co-existence of low level of financial inclusion (FI) and high poverty level in SSA, little attention has been given to emp...
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| Format: | Article |
| Language: | English |
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Editura Universităţii „Alexandru Ioan Cuza” din Iaşi / Alexandru Ioan Cuza University of Iasi Publishing house
2025-06-01
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| Series: | Scientific Annals of Economics and Business |
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| Online Access: | https://saeb.feaa.uaic.ro/index.php/saeb/article/view/2887 |
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| author | Musa Abdullahi Sakanko Nurudeen Abu Awadh Ahmed Mohammed Gamal Salimatu Rufai Mohammed |
| author_facet | Musa Abdullahi Sakanko Nurudeen Abu Awadh Ahmed Mohammed Gamal Salimatu Rufai Mohammed |
| author_sort | Musa Abdullahi Sakanko |
| collection | DOAJ |
| description | There is no doubt that Sub-Saharan Africa (SSA) is home to many financially excluded persons, and the sub-region accounts for a high proportion of the world’s poor. Despite the co-existence of low level of financial inclusion (FI) and high poverty level in SSA, little attention has been given to empirical linkage between these two phenomena. This research attempts to unravel the channels through which FI (measured by the composite financial inclusion index developed using the Principal Component Analysis) impact poverty reduction in a sample of 25 SSA countries. The system-Generalized Method of Moments (i.e., system-GMM) estimator was employed to analyze data for the 2004-2022 period. The empirical outcomes portray that the FI-poverty reduction relation is non-linear, and it identify income growth, consumption expenditure, agricultural output, and unemployment as the channels through which FI influences poverty reduction in the SSA region. The findings further reveal that an FI value beyond thresholds of 1.44 and 5.25 increases income growth and reduces unemployment, thereby reducing poverty. Additionally, an FI value below thresholds of 2.87 and 1.40 positively impacts consumption expenditure and agricultural output, leading to poverty reduction. The study recommends that the monetary authorities in SSA adopt policies which increase the access to financial services and promote financial literacy to enhance financial inclusion and reduce poverty. |
| format | Article |
| id | doaj-art-ce5d1dfb7d0b4ea6928037faa3037d06 |
| institution | DOAJ |
| issn | 2501-3165 |
| language | English |
| publishDate | 2025-06-01 |
| publisher | Editura Universităţii „Alexandru Ioan Cuza” din Iaşi / Alexandru Ioan Cuza University of Iasi Publishing house |
| record_format | Article |
| series | Scientific Annals of Economics and Business |
| spelling | doaj-art-ce5d1dfb7d0b4ea6928037faa3037d062025-08-20T03:23:51ZengEditura Universităţii „Alexandru Ioan Cuza” din Iaşi / Alexandru Ioan Cuza University of Iasi Publishing houseScientific Annals of Economics and Business2501-31652025-06-0172221323610.47743/saeb-2025-00111918Exploring the Channels of Financial Inclusion’s Impact on Poverty Reduction in Sub-Saharan AfricaMusa Abdullahi Sakanko0Nurudeen Abu1Awadh Ahmed Mohammed Gamal2Salimatu Rufai Mohammed3University of Jos, Plateau StateBaba-Ahmed UniversitySultan Idris Education UniversityAir Force Institute of Technology, Kaduna StateThere is no doubt that Sub-Saharan Africa (SSA) is home to many financially excluded persons, and the sub-region accounts for a high proportion of the world’s poor. Despite the co-existence of low level of financial inclusion (FI) and high poverty level in SSA, little attention has been given to empirical linkage between these two phenomena. This research attempts to unravel the channels through which FI (measured by the composite financial inclusion index developed using the Principal Component Analysis) impact poverty reduction in a sample of 25 SSA countries. The system-Generalized Method of Moments (i.e., system-GMM) estimator was employed to analyze data for the 2004-2022 period. The empirical outcomes portray that the FI-poverty reduction relation is non-linear, and it identify income growth, consumption expenditure, agricultural output, and unemployment as the channels through which FI influences poverty reduction in the SSA region. The findings further reveal that an FI value beyond thresholds of 1.44 and 5.25 increases income growth and reduces unemployment, thereby reducing poverty. Additionally, an FI value below thresholds of 2.87 and 1.40 positively impacts consumption expenditure and agricultural output, leading to poverty reduction. The study recommends that the monetary authorities in SSA adopt policies which increase the access to financial services and promote financial literacy to enhance financial inclusion and reduce poverty.https://saeb.feaa.uaic.ro/index.php/saeb/article/view/2887financial inclusionpoverty reductionprincipal component analsysissystem-gmm. |
| spellingShingle | Musa Abdullahi Sakanko Nurudeen Abu Awadh Ahmed Mohammed Gamal Salimatu Rufai Mohammed Exploring the Channels of Financial Inclusion’s Impact on Poverty Reduction in Sub-Saharan Africa Scientific Annals of Economics and Business financial inclusion poverty reduction principal component analsysis system-gmm. |
| title | Exploring the Channels of Financial Inclusion’s Impact on Poverty Reduction in Sub-Saharan Africa |
| title_full | Exploring the Channels of Financial Inclusion’s Impact on Poverty Reduction in Sub-Saharan Africa |
| title_fullStr | Exploring the Channels of Financial Inclusion’s Impact on Poverty Reduction in Sub-Saharan Africa |
| title_full_unstemmed | Exploring the Channels of Financial Inclusion’s Impact on Poverty Reduction in Sub-Saharan Africa |
| title_short | Exploring the Channels of Financial Inclusion’s Impact on Poverty Reduction in Sub-Saharan Africa |
| title_sort | exploring the channels of financial inclusion s impact on poverty reduction in sub saharan africa |
| topic | financial inclusion poverty reduction principal component analsysis system-gmm. |
| url | https://saeb.feaa.uaic.ro/index.php/saeb/article/view/2887 |
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