Reducing Poverty Through Financial Growth: The Impact of Financial Inclusion and Development in Emerging Economies

Abstract

This research explores the impact of financial inclusion and financial development on poverty reduction in developing economies. The study aims to determine whether these financial factors contribute positively or negatively to alleviating poverty. Using quantile regression analysis, the investigation focuses on how financial accessibility and institutional growth influence poverty levels across various economic conditions. The findings indicate that both financial inclusion and financial development play a significant role in reducing poverty by expanding access to financial resources and improving economic participation. As financial systems advance, they facilitate greater utilization of banking services, credit availability, and investment opportunities among low-income populations, ultimately strengthening financial security in developing regions. The study emphasizes the need for governments to enhance financial inclusion through policies that improve accessibility, service quality, and public awareness of financial tools. Additionally, policymakers should foster financial sector development by increasing the availability of banking services, improving institutional efficiency, and ensuring the stability of financial markets. Encouraging higher GDP per capita is also recommended as an effective strategy for sustainable poverty reduction. Furthermore, governments and central banks must adopt fiscal and monetary policies that promote price stability and control inflation, as economic volatility disproportionately affects vulnerable populations. These insights provide a roadmap for policymakers to develop targeted strategies that enhance financial empowerment and foster inclusive economic growth in developing nations.