Financial inclusion in South Africa: a quasi-experimental approach

Master Thesis

2012

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University of Cape Town

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A regressive discontinuity was implemented on the National Income Dynamics Study data in order to assess the impact of an exogenous increase in income, simulated by pension eligibility on the composition of low-income individuals' financial portfolio composition. This was done to facilitate an investigation into the determinants of demand for various formal and informal financial instruments. It was confirmed that this substantial increase in income has a significant effect on the composition of poor individuals' financial portfolios. In addition, several trends emerged: most notable, a stark difference between the response of males and females to this increase in income. It was concluded that the approach of this study provides an effective way to heighten our understanding of the financial lives of the poor, and so to enhance our efforts to alleviate poverty and inequality in South Africa.
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