The effect of financial inclusion on multidimensional poverty: the case of Vietnam

Abstract

Poverty reduction has become a top goal in the socio-economic development strategies of countries and a topic of interest for researchers. A number of prior empirical studies have identified the importance of financial inclusion to poverty reduction. However, most of these studies assess the effect of financial inclusion on income poverty reduction. There are relatively few studies evaluating the impact of financial inclusion, especially in terms of household use of financial products and services, on multidimensional poverty reduction. This study uses a multivariate probit model with a dataset from Vietnam to estimate the effect of financial inclusion in terms of household use of financial products and services and other factors on multidimensional poverty. The results show that financial inclusion reduces multidimensional poverty. Specifically, households owning bank accounts, having savings at banks, using debit cards, credit cards, or investing in stocks or bonds are less likely to fall into multidimensional poverty. Based on the findings, we provide several recommendations for policymakers to increase the level of households’ use of financial products and services.

Keywords:

• financial inclusion
• multidimensional poverty
• multivariate probit
• poverty reduction

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The authors received no direct funding for this research.

Notes on contributors

Huong Thi Thanh Tran

Huong Thi Thanh Tran is the Head of the Statistics Division, Faculty of Accounting and Auditing, Banking Academy, Vietnam. Before working as a lecturer at Banking Academy, she had 10 years working at the General Statistics Office of Vietnam. Her major fields of study include statistics, finance, economic development, and productivity.

Ha Thi Thu Le

Ha Thi Thu Le is the Deputy Dean of the Faculty of Accounting and Auditing, Banking Academy, Vietnam. She has prior working experience as an audit senior at KPMG Vietnam before becoming a lecturer at Banking Academy. Her major research interests include accounting and finance issues.

Nga Thanh Nguyen

Nga Thanh Nguyen is currently a lecturer at the Faculty of Mathematics, Banking Academy, Vietnam. Her major research interests include survival analysis and applied statistics.

Tue Thi Minh Pham

Tue Thi Minh Pham is currently the Deputy Head of Management Accounting Division, Faculty of Accounting and Auditing, Banking Academy, Vietnam. Her major fields of study include accounting and finance issues.

Huyen Thanh Hoang

Huyen Thanh Hoang is currently a lecturer at the Statistics Division, Faculty of Accounting and Auditing, Banking Academy, Vietnam. Her major fields of study include statistics and economics.