IDEAS home Printed from https://ideas.repec.org/a/eee/finana/v96y2024ipbs1057521924006495.html
   My bibliography  Save this article

Is financial inclusion a source of happiness?

Author

Listed:
  • Heyert, Axelle
  • Weill, Laurent

Abstract

This paper investigates whether financial inclusion affects life satisfaction. We perform regressions at the individual level on a large dataset of 59,209 individuals from 29 countries. We find evidence that financial inclusion improves life satisfaction. We further establish that the beneficial effect of financial inclusion takes place through a better health, education and to a lesser extent through the launch of a business. We observe that the positive impact of financial inclusion on life satisfaction is greater in countries with higher income per capita, and lower in countries recently struck by a financial crisis. Our results indicate that promoting financial inclusion can enhance happiness.

Suggested Citation

  • Heyert, Axelle & Weill, Laurent, 2024. "Is financial inclusion a source of happiness?," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    • Handle: RePEc:eee:finana:v:96:y:2024:i:pb:s1057521924006495
    DOI: 10.1016/j.irfa.2024.103717
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1057521924006495
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.irfa.2024.103717?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zhifeng Liu & Xueyi Zhong & Tingting Zhang & Wenquan Li, 2020. "Household debt and happiness: evidence from the China Household Finance Survey," Applied Economics Letters, Taylor & Francis Journals, vol. 27(3), pages 199-205, February.
    2. Callen, Jeffrey L. & Fang, Xiaohua & Zhang, Wenjun, 2020. "Protection of proprietary information and financial reporting opacity: Evidence from a natural experiment," Journal of Corporate Finance, Elsevier, vol. 64(C).
    3. Pengpeng Yue & Aslihan Gizem Korkmaz & Zhichao Yin & Haigang Zhou, 2022. "The rise of digital finance: Financial inclusion or debt trap," Papers 2201.09221, arXiv.org.
    4. Angus Deaton, 2008. "Income, Health, and Well-Being around the World: Evidence from the Gallup World Poll," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 53-72, Spring.
    5. Brown, Sarah & Taylor, Karl & Wheatley Price, Stephen, 2005. "Debt and distress: Evaluating the psychological cost of credit," Journal of Economic Psychology, Elsevier, vol. 26(5), pages 642-663, October.
    6. Thorsten Beck & Chen Lin & Yue Ma, 2014. "Why Do Firms Evade Taxes? The Role of Information Sharing and Financial Sector Outreach," Journal of Finance, American Finance Association, vol. 69(2), pages 763-817, April.
    7. Eleonora Patacchini & Edoardo Rainone, 2017. "Social Ties and the Demand for Financial Services," Journal of Financial Services Research, Springer;Western Finance Association, vol. 52(1), pages 35-88, October.
    8. Mais Sha'ban & Claudia Girardone & Anna Sarkisyan, 2020. "Cross-country variation in financial inclusion: a global perspective," The European Journal of Finance, Taylor & Francis Journals, vol. 26(4-5), pages 319-340, March.
    9. Luc Laeven & Fabian Valencia, 2020. "Systemic Banking Crises Database II," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(2), pages 307-361, June.
    10. Peterson K. Ozili, 2021. "Financial inclusion research around the world: A review," Forum for Social Economics, Taylor & Francis Journals, vol. 50(4), pages 457-479, October.
    11. Guriev, Sergei & Melnikov, Nikita, 2018. "Happiness convergence in transition countries," Journal of Comparative Economics, Elsevier, vol. 46(3), pages 683-707.
    12. Sunitha Singh & Sowmya Kshtriya & Reimara Valk, 2023. "Health, Hope, and Harmony: A Systematic Review of the Determinants of Happiness across Cultures and Countries," IJERPH, MDPI, vol. 20(4), pages 1-68, February.
    13. repec:hal:spmain:info:hdl:2441/4srj73kg79978qkvocpskj1tvb is not listed on IDEAS
    14. Djankov, Simeon & Nikolova, Elena & Zilinsky, Jan, 2016. "The happiness gap in Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 44(1), pages 108-124.
    15. Louis Tay & Cassondra Batz & Scott Parrigon & Lauren Kuykendall, 2017. "Debt and Subjective Well-being: The Other Side of the Income-Happiness Coin," Journal of Happiness Studies, Springer, vol. 18(3), pages 903-937, June.
    16. Hayo, Bernd, 2007. "Happiness in transition: An empirical study on Eastern Europe," Economic Systems, Elsevier, vol. 31(2), pages 204-221, June.
    17. Laeven, Luc & Valencia, Fabian, 2020. "Systemic Banking Crises Database: A Timely Update in COVID-19 Times," CEPR Discussion Papers 14569, C.E.P.R. Discussion Papers.
    18. Ahamed, M. Mostak & Ho, Shirley J. & Mallick, Sushanta K. & Matousek, Roman, 2021. "Inclusive banking, financial regulation and bank performance: Cross-country evidence," Journal of Banking & Finance, Elsevier, vol. 124(C).
    19. Carlos Sakyi‐Nyarko & Ahmad Hassan Ahmad & Christopher J. Green, 2022. "The role of financial inclusion in improving household well‐being," Journal of International Development, John Wiley & Sons, Ltd., vol. 34(8), pages 1606-1632, November.
    20. Neaime, Simon & Gaysset, Isabelle, 2018. "Financial inclusion and stability in MENA: Evidence from poverty and inequality," Finance Research Letters, Elsevier, vol. 24(C), pages 230-237.
    21. Ahamed, M. Mostak & Mallick, Sushanta K., 2019. "Is financial inclusion good for bank stability? International evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 403-427.
    22. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
    23. Yue, Pengpeng & Korkmaz, Aslihan Gizem & Yin, Zhichao & Zhou, Haigang, 2022. "The rise of digital finance: Financial inclusion or debt trap?," Finance Research Letters, Elsevier, vol. 47(PA).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Axelle Heyert & Laurent Weill, 2024. "Is financial inclusion a source of happiness?," Working Papers of LaRGE Research Center 2024-07, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    2. Opfinger, Matthias & Gundlach, Erich, 2011. "Religiosity as a determinant of happiness," Open Access Publications from Kiel Institute for the World Economy 48360, Kiel Institute for the World Economy (IfW Kiel).
    3. Wang, Rui & Luo, Hang (Robin), 2022. "How does financial inclusion affect bank stability in emerging economies?," Emerging Markets Review, Elsevier, vol. 51(PA).
    4. Jantsch, Antje & Le Blanc, Julia & Schmidt, Tobias, 2022. "Wealth and subjective well-being in Germany," Discussion Papers 11/2022, Deutsche Bundesbank.
    5. Peter W. Muriu, 2021. "Does the Quality of Institutions Matter for Financial Inclusion? Cross Country Evidence," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(7), pages 1-27, June.
    6. Choung, Youngjoo & Chatterjee, Swarn & Pak, Tae-Young, 2023. "Digital Financial Literacy and Financial Well-Being," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue Journal P, pages 1-1.
    7. Alícia Adserà & Francesca Dalla Pozza & Sergei Guriev & Lukas Kleine-Rueschkamp & Elena Nikolova, 2021. "Height and well-being during the transition from plan to market," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 36(105), pages 77-120.
    8. Coupe, Tom & Obrizan, Maksym, 2018. "Adolescents’ (un)happiness in transition," Journal of Comparative Economics, Elsevier, vol. 46(3), pages 858-873.
    9. Erich Gundlach & Matthias Opfinger, 2013. "Special Issue. Guest Editor: Zhihao Yu," Review of Development Economics, Wiley Blackwell, vol. 17(3), pages 523-539, August.
    10. Jantsch, Antje & Le Blanc, Julia & Schmidt, Tobias, 2024. "Beyond income: Exploring the role of household wealth for subjective well-being in Germany," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 25(7).
    11. Zhian Zhiow Augustinne Wong & Ramez Abubakr Badeeb & Abey P. Philip, 2023. "Financial Inclusion, Poverty, and Income Inequality in ASEAN Countries: Does Financial Innovation Matter?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 169(1), pages 471-503, September.
    12. Kebede, Jeleta & Naranpanawa, Athula & Selvanathan, Saroja, 2023. "Financial inclusion and income inequality nexus: A case of Africa," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 539-557.
    13. Siddiki, Jalal & Bala-Keffi, Ladi R., 2024. "Revisiting the relation between financial inclusion and economic growth: a global analysis using panel threshold regression," Economic Modelling, Elsevier, vol. 135(C).
    14. Tinghui Li & Junhao Zhong & Mark Xu, 2019. "Does the Credit Cycle Have an Impact on Happiness?," IJERPH, MDPI, vol. 17(1), pages 1-19, December.
    15. Lee, Chien-Chiang & Lou, Runchi & Wang, Fuhao, 2023. "Digital financial inclusion and poverty alleviation: Evidence from the sustainable development of China," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 418-434.
    16. Asadullah, M. Niaz & Xiao, Saizi & Yeoh, Emile, 2018. "Subjective well-being in China, 2005–2010: The role of relative income, gender, and location," China Economic Review, Elsevier, vol. 48(C), pages 83-101.
    17. Elvisa Drishti & Zamira Shkreli & Edvin Zhllima & Blendi Gerdoçi, 2023. "Deprivation, Social Mobility Considerations, and Life Satisfaction: A Comparative Study of 33 European Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(3), pages 511-550, September.
    18. R. V. Naveenan & Chee Yoong Liew & Ploypailin Kijkasiwat, 2024. "Nexus Between Financial Inclusion, Digital Inclusion and Health Outcomes: Evidence from Developing Economies," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 174(1), pages 367-408, August.
    19. Foguesatto, Cristian Rogério & Righi, Marcelo Brutti & Müller, Fernanda Maria, 2024. "Is there a dark side to financial inclusion? Understanding the relationship between financial inclusion and market risk," The North American Journal of Economics and Finance, Elsevier, vol. 72(C).
    20. Maksym Obrizan, 2020. "Transition welfare gaps: One closed, another to follow?," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 28(4), pages 621-635, October.

    More about this item

    Keywords

    Financial inclusion; Life satisfaction; Banking;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P46 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finana:v:96:y:2024:i:pb:s1057521924006495. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620166 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.