Financial Inclusion, Education, and Poverty in Indonesia: Evidence from Provincial Panel Data

Farah Asalin Mustin; Ariusni Ariusni

doi:10.55927/fjmr.v5i8.189

Authors

Farah Asalin Mustin Universitas Negeri Padang
Ariusni Ariusni Universitas Negeri Padang

DOI:

https://doi.org/10.55927/fjmr.v5i8.189

Keywords:

Financial Inclusion, Education, Poverty, Panel Data, Indonesia

Abstract

This study examines whether financial inclusion and education reduce poverty and whether education strengthens the poverty-reducing effect of financial inclusion across 34 Indonesian provinces. A balanced provincial panel of 170 observations for 2020–2024 was analyzed using fixed-effects regression. Financial inclusion was measured through a multidimensional index of accessibility, availability, and usage. Financial inclusion and mean years of schooling had significant negative associations with poverty, whereas their interaction was negative but not significant. Unemployment was not significant, while economic growth showed a positive association with poverty, indicating unevenly distributed growth. The findings support integrated financial-access and human-capital policies but show that formal education alone does not ensure productive financial capability.

References

Ashari, H., Nugrahanti, T. P., & Santoso, B. J. (2024). The role of microfinance institutions during the COVID-19 pandemic. Global Business and Economics Review, 30(2), 210–233. https://doi.org/10.1504/GBER.2024.136426

Attanasio, O., Cattan, S., & Meghir, C. (2022). Early Childhood Development, Human Capital, and Poverty. Annual Review of Economics, 14, 853–892. https://doi.org/10.1146/annurev-economics-092821-053234

Barra, C., & Papaccio, A. (2024). Does Regulatory Quality Reduce Informal Economy? A Theoretical and Empirical Framework. Social Indicators Research, 172(2), 543–567. https://doi.org/10.1007/s11205-024-03319-6

Chen, S., Liang, M., & Yang, W. (2022). Does Digital Financial Inclusion Reduce China’s Rural Household Vulnerability to Poverty: An Empirical Analysis From the Perspective of Household Entrepreneurship. SAGE Open, 12(2). https://doi.org/10.1177/21582440221102423

Congna, H., & Saad, N. (2025). The impact of human capital on employment quality: a scoping review. Cogent Education, 12(1). https://doi.org/10.1080/2331186X.2025.2552352

Czech, K., Ochnio, L., Wielechowski, M., & Zabolotnyy, S. (2024). Financial Literacy: Identification of the Challenges, Needs, and Difficulties among Adults Living in Rural Areas. Agriculture (Switzerland), 14(10), 1–17. https://doi.org/10.3390/agriculture14101705

Dang, H. A. H., Hallegatte, S., & Trinh, T. A. (2024). Does global warming worsen poverty and inequality? An updated review. Journal of Economic Surveys, 38(5), 1873–1905. https://doi.org/10.1111/joes.12636

Feng, S., Mohd Shafiei, M. W., Ng, T. F., Ren, J., & Jiang, Y. (2024). The intersection of economic growth and environmental sustainability in China: Pathways to achieving SDG. Energy Strategy Reviews, 55(September), 101530. https://doi.org/10.1016/j.esr.2024.101530

Gosztonyi, M. (2023). Metamorphosis: The Credit Market of Low-Income Households in a Semi-Peripheral Country. Journal of Systems Science and Complexity, 36(6), 2434–2466. https://doi.org/10.1007/s11424-023-1472-x

Haile, D., Seyoum, A., & Azmeraw, A. (2023). Structural and stochastic poverty, shocks, and resilience capacity in rural Ethiopia. Cogent Economics and Finance, 11(2). https://doi.org/10.1080/23322039.2023.2256124

Håkansta, C., Gunn, V., Kreshpaj, B., Matilla-Santander, N., Wegman, D. H., Hogstedt, C., Vignola, E. F., Muntaner, C., Bodin, T., O’Campo, P., & Lewchuk, W. (2025). What is the Role of Minimum Wages in Addressing Precarious Employment in the Informal and Formal Sectors? Findings from a Systematic Review. International Journal of Social Determinants of Health and Health Services, 55(2), 124–147. https://doi.org/10.1177/27551938241286463

Hamada, I., & Ellen, H. C. (2026). Hidden precarity: post-separation challenges among Japanese migrant women in Australia. Japan Forum, 0(0), 1–36. https://doi.org/10.1080/09555803.2026.2671052

Hamzat, L. (2025). Real-Time Financial Resilience and Debt Optimization for Entrepreneurs: Tackling Debt Management as a Financial Health Pandemic and Empowering Small Business Growth Through Early Detection of Financial Distress and Effortless Capital Management. International Journal of Research Publication and Reviews, 6(5), 202–223. https://doi.org/10.55248/gengpi.6.0525.1822

Hu, Z., & Xu, J. (2025). How Does the Risk of Returning to Poverty Emerge Among Poverty-Alleviated Populations in the Post-Poverty Era? A Livelihood Space Perspective. Sustainability (Switzerland), 17(11), 1–28. https://doi.org/10.3390/su17115079

Jalili, R., Gilani, N., Najafi, B., Gordeev, V. S., & Doshmangir, L. (2025). Health financial resilience in individuals and households: a scoping review of components, strategies and outcomes. BMC Public Health, 25(1). https://doi.org/10.1186/s12889-025-24467-5

Kadir, R. D., Tri Wahyudi, S., Maski, G., & Devia Sagita Sumantri, V. (2025). The role of financial inclusion in reducing household poverty: insights from Eastern Indonesia. Cogent Economics and Finance, 13(1). https://doi.org/10.1080/23322039.2025.2588925

Katnic, I., Katnic, M., Orlandic, M., Radunovic, M., & Mugosa, I. (2024). Understanding the Role of Financial Literacy in Enhancing Economic Stability and Resilience in Montenegro: A Data-Driven Approach. Sustainability (Switzerland), 16(24). https://doi.org/10.3390/su162411065

Konstantakopoulou, I. (2023). Financial Intermediation, Economic Growth, and Business Cycles. Journal of Risk and Financial Management, 16(12). https://doi.org/10.3390/jrfm16120514

Kyeyune, G. N., & Ntayi, J. M. (2024). Empowering rural communities: the role of financial literacy and management in sustainable development. Frontiers in Human Dynamics, 6(February), 1–15. https://doi.org/10.3389/fhumd.2024.1424126

Leoni, S. (2025). A Historical Review of the Role of Education: From Human Capital to Human Capabilities. Review of Political Economy, 37(1), 227–244. https://doi.org/10.1080/09538259.2023.2245233

Mbona, N. (2022). Impacts of Overall Financial Development, Access and Depth on Income Inequality. Economies, 10(5). https://doi.org/10.3390/economies10050118

Melaku, E. A. (2026). Determinants and challenges of rural poverty in Ethiopia. Discover Sustainability, 7(1), 1–18. https://doi.org/10.1007/s43621-026-03076-1

Minarni, E. (2025). Impact of Digital Payment Systems on Financial Inclusion and Small Business Growth in Developing Economies. International Journal of Innovation and Thinking, 2(1), 1–12. https://doi.org/10.71364/ijit.v2i1.6

Mishra, D., Kandpal, V., Agarwal, N., & Srivastava, B. (2024). Financial Inclusion and Its Ripple Effects on Socio-Economic Development: A Comprehensive Review. Journal of Risk and Financial Management, 17(3). https://doi.org/10.3390/jrfm17030105

Molla, T., & Gale, T. (2024). Educational disadvantage and policy: expanding the spaces of assessment. Journal of Education Policy, 39(1), 105–126. https://doi.org/10.1080/02680939.2023.2218322

Moreno-Menéndez, F. M., González-Prida, V., Pariona-Amaya, D., Zacarías-Rodríguez, V. E., Zacarías-Vallejos, V., Zacarías-Vallejos, S. R., Aguilar-Cuevas, L. A., & Campos-Carpena, L. P. (2025). Improving Financial Sustainability Through Effective Credit Risk Management and Human Talent Development in Microfinance Institutions. International Journal of Financial Studies, 13(2), 1–31. https://doi.org/10.3390/ijfs13020060

Morris, M. H., Kuratko, D. F., Audretsch, D. B., & Santos, S. (2022). Overcoming the liability of poorness: disadvantage, fragility, and the poverty entrepreneur. Small Business Economics, 58(1), 41–55. https://doi.org/10.1007/s11187-020-00409-w

Paidi, P. (2026). Examining the Connection Between Financial Inclusion and Income Inequality in Indonesia. Economies, 14(4). https://doi.org/10.3390/economies14040122

Park, E., & Yi, S. (2025). Compulsory education enhances financial inclusion across socioeconomic groups: a global analysis. Humanities and Social Sciences Communications, 12(1), 1–14. https://doi.org/10.1057/s41599-025-04911-y

Rejekiningsih, T. W., Kurnia, A. S., & Sugiyanto, F. X. (2022). Analysis of Efficiency of Intermediation Functions From Financial Institutions and Consumer Surplus of Funds in Indonesia. International Journal of Economics and Finance Studies, 14(1), 377–408. https://doi.org/10.34109/ijefs.20220017

Tingini, T. L., & Eniowo, O. D. (2026). Investment viability and sustainable formalisation in Zimbabwe’s artisanal and small-scale gold mining: a value-chain perspective. Mineral Economics. https://doi.org/10.1007/s13563-026-00676-1

Wang, W., Zhao, X., & Li, H. (2025). How effective is poverty alleviation relocation in enhancing farmers’ livelihoods? Insights from a livelihood system perspective. Habitat International, 166(August), 103592. https://doi.org/10.1016/j.habitatint.2025.103592