Investigation of Financial Inclusion, Financial Technology, Economic Fundamentals, and Poverty Alleviation in ASEAN-5: Using SUR Model

Abstract

This study investigated the effect of financial inclusion and fintech on economic fundamentals and poverty rates in five developing countries in ASEAN (ASEAN-5) using the Seemingly Unrelated Regression (SUR) model during the period 2009 to 2019. The results obtained are: (1) Financial inclusion through the credit variable and the number of ATMs, and fintech through the e-money variable, contributed to the most significant increase in GDP in the ASEAN-5 countries. Meanwhile, the most critical contributor to reduction in the unemployment rate from financial inclusion is through the credit and savings variables, while from fintech it is through mobile phone subscriptions. (2) Thailand is the country that has most effectively influenced the economic fundamental of unemployment rate, while Indonesia is the country that has most effectively influenced the economic fundamental of GDP. The results obtained from the panel regression model and cross-sectional weighting indicate that financial inclusion through savings, credit, and number of ATMs, and fintech through cellular phone subscription, are effective in reducing poverty rates in the ASEAN-5 countries. Nevertheless, financial inclusion and fintech do not significantly affect the inflation rate.