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Does Financial Inclusion Reduce Poverty and Unemployment? Some Evidences from Indian States
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This paper makes an attempt to empirically examine whether financial inclusion has contributed to poverty reduction and decrease in unemployment in Indian states. Using a balanced panel data set for 29 states and Union Territories between 2009- 10 and 2013-14, models explaining poverty and unemployment are constructed where the independent variables of interest are financial inclusion indices. The other explanatory variables are treated as control variables including the credit- deposit ratio and literacy rate. From the estimated System Generalised Method of Moments models, financial inclusion is found to reduce poverty in rural areas, urban areas and the overall- state economy. Besides, the paper finds that financial inclusion reduces unemployment significantly in the rural areas and the economy as a whole, while its effect in urban areas is minimal.
Keywords
Financial Inclusion, Poverty Reduction, Unemployment.
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