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Accepted Paper:
Does Financial Inclusion Impact Energy Poverty?
Ranjula Bali Swain
(Stockholm School of Economics)
Ashim Kar
We examine the nexus between financial inclusion and energy poverty by analysing data for 48 energy-poor countries in South Asia, Sub-Saharan Africa and Latin America over 2004-2019.
Paper long abstract:
We examine the nexus between financial inclusion and energy poverty. Analysing data for 48 energy-poor countries in South Asia, Sub-Saharan Africa and Latin America over 2004-2019, we employ sequential (two-stage), panel-corrected standard error and two-step dynamic system GMM regression models to control for endogeneity, cross-sectional dependence, slope heterogeneity as well as stationarity and cointegration patterns of the variables. Our empirical results find that financial inclusion significantly reduces energy poverty by way of increasing access to electricity in the selected energy-poor regions. The study also finds a positive significant association between energy access and GDP per capita, while oil price and energy intensity are inversely associated with energy access. The results are robust to different variables, estimation methods and subsamples. These findings have strong policy implications for energy-poor countries and point to the need for appropriate policies to promote financial inclusion as a way of reducing energy poverty.