Unconditional Cash Transfers and Financial Inclusion: Evidence from Pakistan’s Benazir Income Support Program

Abstract

In the past three years, unemployment and income inequality have risen dramatically across Asian economies. The unemployment rate and the sensitive price index (SPI) of Pakistan in the post-COVID years have been surging continuously. This particular situation in Pakistan paints a discouraging picture. Faced with these challenges, the Pakistani government has continued its Benazir Income Support Program (BISP), which provides unconditional cash transfers to women living in poverty. This study evaluated Pakistan’s largest unconditional cash transfer welfare program's association between BISP and women’s financial inclusion. We conducted an extensive study using cross-sectional microdata from the Punjab Bureau of Statistics (BoS) Women’s Economic and Social Wellbeing Survey (2022), covering approximately 32,878 women across 36 districts of Punjab, Pakistan. We employed the Logit and Probit models to determine whether the BISP program, as an unconditional cash transfer program, motivates recipient women to achieve financial inclusion (bank account ownership). Our findings suggest that BISP has a positive impact on financial inclusion, indicating that such government programs can contribute to women's empowerment and ultimately improve their financial standing. These results offer policy-relevant evidence for governments considering similar cash transfer programs, highlighting the enduring importance of education in empowering women to access and manage bank accounts.

JEL Classification Codes: D14, D63, I32, I38, G21, O12