Financial inclusion and the role of patience

Purpose While a substantial body of literature has explored the role of patience in shaping both microeconomic and macroeconomic outcomes, its influence on financial inclusion remains underexplored. By promoting a long-term outlook and discouraging impulsive behaviour such as market timing, patience can help households navigate financial volatility and better align their decisions with long-term financial objectives. Using India as a case study, this paper investigates the impact of patience on financial inclusion, a dimension that has received limited scholarly attention. Design/methodology/approach Financial inclusion is examined through two key dimensions: account ownership and savings behaviour. A logit model is employed to assess the determinants of account ownership, while a Heckman probit model is used to analyse savings behaviour, since it is conditional on the former. To ensure robustness, the analysis is supplemented with an instrumental variable (IV) approach. Findings The results reveal a nonlinear relationship between patience and financial inclusion, encompassing both account ownership and savings. Patient households tend to allocate a greater share of resources to physical rather than financial assets. Within the realm of financial assets, their savings are more heavily skewed towards safer instruments than towards riskier alternatives. These findings are robust across various specifications. Research limitations/implications The cross-sectional nature of the data suggests that these findings should be interpreted as conditional correlations rather than causal effects. Practical implications The analysis highlights the crucial role of patience in promoting financial inclusion. By fostering a long-term mindset, patience can guide households towards more prudent financial behaviour, minimising exposure to risk and enhancing their ability to build a sustainable financial foundation. These insights hold valuable implications for the design of financial literacy and inclusion programs. Originality/value To the best of our understanding, this is one of the early studies to analyse the linkage between patience and financial inclusion.