Investigating financial exclusion through the lens of socio-economic inequalities: Implications for financial well-being

Abstract

The aim of the study was to measure the level of socio-economic inequalities appeared due to financial exclusion and then to measure their effect on financial well-being of people according to the different socioeconomic characteristics. This research used the 2021 version of Global Findex Survey and was disseminated in 2023 with a sample of 1,003 respondents. The inequality in financial exclusion is measured using the concentration index and the concentration curves. For studying the effect of financial exclusion on financial well-being, binary logistic regression model is used. The results of this research revealed that socio-economic inequalities represented drivers for financial exclusion exemplified in poor, females, rural, unemployed, least educated and young population. With respect to access exclusion, results revealed that 76.7% of the poorest 20%, 70% of the females, 70% of the rural, 68.5% of the unemployed, 65.7% of the uneducated and 85.3% of the young respondents were unbanked. On the other hand, with respect to usage exclusion, results revealed that 88.7% of the poorest 20%, 78.8% of the females. 80% of the rural, 77.7% of the unemployed, 76.8% of the uneducated and 90.8% of the young respondents had inactive accounts. Additionally, results of the regression analysis showed that income, age, and usage exclusion for the purpose of saving have significant effect on financial resilience. While usage exclusion for the purpose of saving, age, working status, and gender have significant effect on financial worry. This research adds significant value to the current knowledge through filling the gap in understanding socio-economic inequalities associated with financial exclusion since it succeeded in identifying those who are financially excluded. The study proposes an action plan that outlines concrete steps aiming at reducing financial exclusion at one hand and promoting financial well-being in Egypt on the other hand.