Financial inclusion and multidimensional poverty alleviation: the moderating role of governance efficiency in Asian countries

<title>Abstract</title> Persistent multidimensional poverty across Asia reflects systemic inequalities in economic participation, where financial exclusion exacerbates deprivation in health, education, and living standards. While financial inclusion is widely advocated for poverty alleviation, its efficacy remains contingent on governance quality and the modality of financial access traditional versus digital. This study examines how governance efficiency moderates these distinct inclusion pathways across 20 Asian economies (2011–2022). Through principal component analysis, we construct original indices measuring governance efficacy, financial inclusion modalities, and multidimensional poverty. Robust panel estimations reveal that digital financial inclusion consistently outperforms traditional systems in poverty reduction, with governance efficiency critically amplifying digital benefits while mitigating institutional weaknesses in conventional finance. Regulatory quality emerges as pivotal in transforming access into tangible welfare gains. These findings necessitate integrated policy approaches: targeted digital infrastructure investment, governance reforms emphasizing anti-corruption safeguards and adaptive fintech regulation, and synergistic initiatives linking financial access to health and education services. By demonstrating how institutional architectures shape financial inclusion’s poverty-alleviation outcomes, this research redefines inclusive development strategies for Asia’s heterogeneous socioeconomic landscape.