Women’s Empowerment and Sustainable Development Goal‐1: The Moderating Role of Financial Inclusion in Rural Eastern India

ABSTRACT Poverty reduction remains a significant challenge globally, despite extensive efforts at both national and international levels. Past studies have observed that households are not only poor but also vulnerable to poverty and have suggested enhancing their coping capacity to end poverty. Recently, women's empowerment (WE) has gained attention among policymakers because of its effectiveness in increasing household coping capacity and reducing poverty. However, there have been limited studies that empirically examined the impact of WE on household vulnerability to poverty (VtP). This study aims to analyse the impact of WE on household VtP. Studies have also observed that financial inclusion (FI) removes barriers and strengthens WE; thus, the study also examined the moderating role of FI. Using cross‐sectional data from 467 rural households in the eastern Indian state, Odisha, the study used the Alkire‐Foster counting technique to measure both WE and FI, whereas a feasible generalised least squares (FGLS) approach was used to measure household VtP and an Instrumental Variable (IV) technique was employed to address potential endogeneity and assess the causal relationship. Findings from the IV estimates reveal that WE significantly reduces VtP, with the impact being stronger in households that have access to formal financial services. These findings underscore the importance of FI in rural areas and to maximise the benefit of WE, the study suggests that the government should emphasise WE and FI in rural areas.