Analysing the effect of financial inclusion on income inequality in Namibia

While there is growing evidence on the effect of financial inclusion on household income and well-being, much is not known about the distributional effects across the different income quintiles. This study contributes to the literature by examining the effect of financial inclusion on household well-being and income inequality in Namibia, using the 2017 nationally representative household financial inclusion survey. Household per capita income and household asset index were created using the UNDP approach and considered as proxies for household income and well-being respectively. Financial inclusion is proxied by access and use of formal bank accounts, savings, and credit accounts. The study employed a two-stage least squares (2SLS) regression to estimate the effect of financial inclusion on household well-being and a quantile regression to investigate to estimate the effect of financial inclusion on income inequality. The study elicits some interesting results. First, the study finds that financial inclusion has a positive and significant effect on household income and well-being. Second, the magnitude of the effects was found to vary between rural and urban households with effects generally higher among urban than rural households. Third, financial inclusion was found to have a positive and significant effect across all quantiles of the income distribution, with greater effects in the higher quantiles when access to formal credit is considered and greater effects in the lower quintiles when access to formal banks and savings accounts is considered. Finally, the study finds that household socioeconomic characteristics such as education and gender of the household head, urban residence, and household size are important determinants of household income and well-being. The study recommends that national and international agencies continue improving access to formal financial services to narrow the gap between the wealthy and the poor, primarily in rural areas and low-income quintile households

Grantor dc:publisher

University of Namibia

Year dc:date.issued

2024

Author dc:creator

• Shimueoshili, Tsheya N.B.

• Financial inclusion
• Income inequality
• Well-being
• Namibia

Language dc:language.iso

en

Handle dc:identifier.uri

http://hdl.handle.net/11070/3834

OAI identifier oai:identifier

oai:repository.unam.edu.na:11070/3834