Financial Inclusion and Household Wellbeing in Namibia

Abstract

Purpose: Financial inclusion is increasingly being recognised as having an important influence on household wellbeing, as it provides resources and income, enhances consumption and investment in productive assets and stimulates overall economic growth. In this paper, we examine the impact of financial inclusion on household wellbeing in Namibia. Design/methodology: Using data extracted from the 2017 Namibia Financial Inclusion Survey, a UNDP approach for computing human development indices is used to generate a wellbeing index. Two-stage least squares regression analysis is employed to address the potential endogeneity associated with financial inclusion. Findings: The results suggest the positive and significant effects of financial inclusion on household wellbeing. The effects are consistent across location and gender when different methodological approaches are applied. Household characteristics such as education, income, and financial decisions, are important determinants of household wellbeing. Implications: National and international agencies are encouraged to promote policies that enhance the ability of both the public and private sector to innovate and expand financial services to vulnerable populations. Originality/value: An inclusive financial system is key in determining the level of household wellbeing, but many studies have utilised macro time-series data as opposed to household data, to tease out this relationship.