Analysis of Financial Inclusion and Literacy in Reducing Poverty Levels in Indonesia

Abstract

This study aims to analyze the effect of payment systems, financial inclusion, and financial literacy on economic growth and poverty levels in Indonesia. This study uses secondary data for the period 2015–2025 and applies a simultaneous equation model approach. The variables used in this study consist of Financial Literacy (LIT), Payment System (SP), Financial Inclusion (INK), Economic Growth (PE), and Poverty (KEM). The results of the first equation estimation show that financial literacy, payment systems, and poverty do not have a significant effect on economic growth at the 5% significance level. The first equation model has an R-squared value of 71.58%. In the second equation, the payment system has a negative and significant effect on poverty with a probability value of 0.0017 < 0.05, while financial inclusion and economic growth have a negative but insignificant effect. The second equation model has an R-squared value of 97.01%, indicating that the independent variables are able to explain most of the variation in poverty levels. The development of payment systems in Indonesia showed an increasing trend during the research period, although it experienced a decline in 2020 due to the COVID-19 pandemic and recovered to reach 2.89 million in 2025. The findings indicate that the payment system is a significant factor in reducing poverty in Indonesia. Meanwhile, financial literacy and financial inclusion have not shown significant effects on economic growth and poverty during the research period. This indicates that improvements in financial access and knowledge need to be accompanied by more productive utilization in order to generate greater economic impacts.