The Impactof Financial Inclusion on Poverty Reduction In Ethiopia
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Date
2025-10-24
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Addis Ababa University
Abstract
Ethiopia, a country with high poverty levels and a rapidly growing population, is tively promoting financial inclusion as a strategy for poverty reduction. The study uses a time series data analysis approach to quantify the impact of specific financial inclusion indicators on poverty reduction and identify channels through which they operate. The study fills a critical knowledge gap in the Ethiopian context by offering a nuanced understanding of how financial instruments impact poverty reduction. ARDL
and Granger causality model is used to examine the relationship between financial inclusion and poverty reduction over a 30-year period. The analysis reveals a signifi
cant negative long-run relationship between the Poverty and independent variables. The findings emphasize that structural improvements in education and access to fi
nancial services are key to sustainable poverty reduction in Ethiopia. The study rec ommends Ethiopia's sustainable poverty reduction through education, risk mitigation, credaccessstrategies, mobile technology, and an integrated strategy. It emphasizes
the importance of education, addressing barriers like school fees and cultural factors. The study also suggests lowering insurance costs, improving financial literacy, and using credit effectively. It also suggests an integrated strategy that connects financial inclusion, education, and socioeconomic elements. The paper advocates for long-term structural investments in key sectors and policies for long-term implementation. In conclusion, this research provides evidence-based insights to guide policymakers,
evaluate government initiatives, assist financial institutions, and emphasize the importance of financial literacy programs in enhancing overall financial inclusion.
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Keywords
: Ethiopia, Poverty reduction, financial inclusion