Does Financial Inclusion Outcome is Supporting Formal Borrowing among Individuals

Abstract

This study examines whether financial inclusion outcomes support formal borrowing in South Asia using Global Findex microdata for 2,591 adults who reported borrowing. Formal borrowing is the dependent variable, while bank account ownership and mobile money account ownership are the main inclusion indicators. Logit models are estimated for the full sample and across gender and urban–rural groups. The results show that bank account ownership is strongly and consistently associated with a higher likelihood of formal borrowing. Mobile money accounts also support formal borrowing, but the effect is weaker and more evident among men and urban residents. Age, income, labour force status and country context further shape borrowing outcomes. Overall, financial inclusion promotes formal borrowing, but access alone is not sufficient. Policies must strengthen enabling conditions so that inclusion translates into meaningful engagement with regulated credit.