Financial inclusion and poverty: evidence from Armenia

We study the relationship between financial inclusion and multidimensional poverty in Armenia, using household level dataset for the years 2016 - 2018. We identify three key dimensions for financial inclusion, namely, access to finance, savings behavior and financial literacy. Income, education, health, living standards and employment are the dimensions used for measuring multidimensional poverty. We noted that health is the main contributor to multidimensional poverty while income has no impact on poverty. From the regression analysis, we find that that better access to finance, savings from monthly income and financial literacy have the potential to alleviate poverty. Nevertheless, an excess of credit lines is of particular damage to vulnerable households by increasing the risk of deprivation. The government and central bank are encouraged to design or enhance policies that provide an enabling environment for inclusive and accessible financial services.