Financial Inclusion as a Pathway to Poverty Alleviation and Equality in Latin America: An Empirical Analysis

This study examines the impact of financial inclusion (FI) on reducing poverty and income inequality in Latin America and the Caribbean (LAC), using panel data from 15 countries for the period 2004–2021. System GMM with robust errors was used to address endogeneity issues, and FI was assessed in terms of access to and use of the financial system. The results indicate that increased FI contributes to reducing poverty and income inequality in LAC. While access to financial services plays a crucial role in poverty reduction, the utilization of financial services has a more profound impact on combating income inequality. These results underscore the importance of policies designed to improve financial access and promote the use of financial products and services. It is recommended to expand the banking infrastructure, facilitate the provision of low-cost accounts, and strengthen financial education programs.