Pathways to Financial Inclusion: Understanding Financial Well-Being in Middle- and Low-Income Countries in the Age of COVID-19

Financial inclusion has grown in importance as a policy goal, both as an end and as a means to eradicating poverty and achieving 10 of the 17 Sustainable Development Goals. In particular, digital payments have revolutionized the way financial services are provided and have the potential to expand financial inclusion for all. Digital financial services (DFS) have often been argued, albeit not without controversy, to be a tool for empowering women and helping economies withstand unforeseen shocks. The COVID-19 pandemic has accelerated this shift towards digital finance, highlighting both the positive aspects and the challenges that accompany this transition.

This thesis explores the relationship between financial inclusion, financial well-being and human development in the context of COVID-19. Using a cross-sectional dataset from the World Bank Global Findex and UNDP Human Development Index in year 2021, this study employs regression analyses to investigate the determinants of financial inclusion with respect to financial well-being and hardship in low- and middle-income countries in the age of COVID-19. It also explores the distributional concerns and identifies vulnerable groups that face even greater challenges and barriers to financial inclusion. The results are expected to contribute to the larger discussion on the role of digital financial services in promoting financial inclusion and financial well-being for all, particularly during times of economic uncertainty. The results of this study will provide important insights for policymakers to improve in financial inclusion and strengthen the resilience of low- and middle-income countries against future pandemics and economic shock.