Does financial inclusion really improve health? Evidence from sub-Saharan Africa

Abstract

ABSTRACT
This paper investigates the dynamics in the relationship between financial inclusion and health indicators (newborn deaths and life expectancy of adults) in 29 sub-Saharan Africa (SSA) nations over the period 2007 to 2018. It specifically establishes both the short-run and long-run relationship between financial inclusion and health. The study employed Panel unit roots, Panel causality test, Panel co-integration test, and Panel regressions. The preliminary findings from Panel unit roots and Panel co-integration test shows that all the variables are integrated of order one, and there exists a uni-directional link from financial inclusion proxies to health indicators. The main findings reveal an inverse short- and long-run effect of financial inclusion on newborn deaths, but positive on average life expectancy. The Panel co-integration tests also showed that the impact of financial inclusion on health is stable, where all the financial inclusion proxies significantly influence health in the long-run. With the error correction terms of 7% and 2% for life expectancy and newborn deaths, respectively, the study shows that the speed of adjustment of the impact of financial inclusion on health is quite slow in responding to health shocks, such as, rising sick-days and diseases. These findings then suggest strategies aiming at increasing financial inclusion in SSA countries, these will not only reduce infant deaths, but also enhance longevity both in short- and long-terms.