Financial inclusion and expenditure patterns : insights from slum households in Bangladesh

Vulnerable households often tend to decrease their human capital expenditures, like education and training, to maintain food and non-food (clothing and housing) expenditures when any income shock occurs. Financial inclusion acts as a safeguard to maintain the stability of human capital investments in households because it provides an opportunity to save additional resources to invest for productive purposes. This study examines the impact of financial inclusion on the expenditure pattern of slum households in Bangladesh using propensity score matching. Four outcomes-food, non-food, educational, and health expenditure-are considered in this study. A heterogeneous analysis and inverse probability weighted regression adjustment estimation were conducted as robustness checks. Our results demonstrate that financial inclusion has only a significant positive impact on slum households' educational expenditures, while financial inclusion has no impact on food, non-food, or health expenditures.