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<p>Climate change (CC) is a major environmental externality that threatens households in developing countries, especially where adaptive capacity is limited. Expanding financial inclusion (FI) through decentralized financial services and digital finance can strengthen households’ ability to cope with climate-related shocks. This study analyzes the effect of FI on household resilience to CC in Sub-Saharan Africa (SSA). Using cross-sectional data from 51,044 households in 37 countries, we estimate a fractional probit model with country fixed effects and an instrumental-variable extension to address endogeneity. Sensitivity tests are performed to account for biases linked to regional population size. The results show that FI significantly enhances overall household resilience to CC, with particularly strong effects for women and rural households. By considering a three-pillar resilience framework, the results indicate the need for a more cautious and context-sensitive approach to FI in climate resilience policies. While FI improves households’ coping and adaptive capacities, it has a statistically significant negative effect on transformative capacity, suggesting that expanded access to financial services alone may reinforce existing structural constraints if complementary reforms are neglected. This pattern is consistent across gender and rural–urban groups. These findings suggest that expanding digital financial services, particularly in rural areas, should be complemented by targeted financial education, climate-responsive financial products, and institutional support to avoid deepening structural vulnerability. Strengthening FI alongside complementary reforms can enhance household resilience while supporting sustainable development in SSA.</p>

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Financial inclusion and climate change resilience in sub-Saharan Africa: a micro-level gender and households’ location-based analysis

  • 期刊论文

  • 发表日期：

    2026年1月29日

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  • Essossinam Ali

摘要

Climate change (CC) is a major environmental externality that threatens households in developing countries, especially where adaptive capacity is limited. Expanding financial inclusion (FI) through decentralized financial services and digital finance can strengthen households’ ability to cope with climate-related shocks. This study analyzes the effect of FI on household resilience to CC in Sub-Saharan Africa (SSA). Using cross-sectional data from 51,044 households in 37 countries, we estimate a fractional probit model with country fixed effects and an instrumental-variable extension to address endogeneity. Sensitivity tests are performed to account for biases linked to regional population size. The results show that FI significantly enhances overall household resilience to CC, with particularly strong effects for women and rural households. By considering a three-pillar resilience framework, the results indicate the need for a more cautious and context-sensitive approach to FI in climate resilience policies. While FI improves households’ coping and adaptive capacities, it has a statistically significant negative effect on transformative capacity, suggesting that expanded access to financial services alone may reinforce existing structural constraints if complementary reforms are neglected. This pattern is consistent across gender and rural–urban groups. These findings suggest that expanding digital financial services, particularly in rural areas, should be complemented by targeted financial education, climate-responsive financial products, and institutional support to avoid deepening structural vulnerability. Strengthening FI alongside complementary reforms can enhance household resilience while supporting sustainable development in SSA.