EFFECTS OF FINANCIAL INCLUSION ON POVERTY REDUCTION AND INCOME INEQUALITY IN BOTSWANA
Date
2021-01-08
Authors
LECHANI, KGANGYAME
Journal Title
Journal ISSN
Volume Title
Publisher
UNIVERSITY OF BOSTWANA
Abstract
The study examines the effect of financial inclusion on poverty reduction and income inequality in
Botswana using quarterly time series data for the period 2004-2017. The Autoregressive
Distributed Lag (ARDL) model is used to establish the effect of financial inclusion on poverty
reduction and income inequality. The ARDL approach integrates both the short-run relationship
and long-run relationship. The results showed that financial inclusion significantly reduces
poverty and income inequality, both in the short run and in the long run.
Moreover, other socio-economic variables, per capita income, education, population growth, and
age dependency ratio have a negative relationship with poverty rates, suggesting that an increase
in these variables would promote a reduction in poverty rates in Botswana. Similarly, the age
dependency ratio and per capita have a negative effect on income inequality in the long run.
These results suggest that, policies that promote financial inclusiveness are imperative for
reducing the high rates of poverty and income inequality in Botswana.