#1Financial Inclusion in Papua New Guinea Martin Davies¹ & Laura Nettuno² 1Washington & Lee University 2Vanderbilt University August 4, 2022 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 1/36#2Research Question • What individual level characteristics determine financial inclusion in Papua New Guinea? ► Gender ▸ Education ▸ Distance to bank English • What is the influence of gender on financial inclusion in Papua New Guinea? Spillover benefits from husbands to wives, but not from wives to husbands. • Approach ▸ Theoretical model Empirical estimation of descriptive results ▸ Novel dataset consisting of both the male and female heads of household, which allows us to examine intra-household bargaining. <口> 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 2/36#3Overview → Financial Inclusion: What is it? Relevant literature 3 Theoretical model and conclusions Data > Empirical specification ● Results Policy discussion • Conclusion 594 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 3/36#4Financial Inclusion: What is it? Supply-side definitions "Access to appropriate financial services so that people can manage their money effectively, securely and confidently on a day-to-day basis; plan for the future and cope with financial distress to protect against short term variations in income and expenditure and take advantage of longer term opportunities and deal effectively with financial distress." (HM Treasury) "Individuals and businesses have access to useful and affordable - delivered in a responsible financial products and services that meet their needs - transactions, payments, savings, credit and insurance and sustainable way." (World Bank) Our paper focuses on observed financial inclusion (demand and supply) as measured by bank account ownership 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 4/36#5Financial Inclusion: Why is it so important? Allows households to smooth consumption • Investment in education and health ► Drivers of long term economic growth and development Higher growth and lower inequality • Exploit business opportunities (SMEs) ▸ Leads to job creation • Financial services act as a bridge between economic opportunity and outcome • Policy relevance: understand of the restrictions/bottlenecks that prevent access to financial services by poorer households. Helps to build policy changes that will enable and empower households to use financial services. <口> 594 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 5/36#6Financial Inclusion in PNG 2021: ~40% of adults in low- and middle-income Asia-Pacific economies do not have a bank account, and less than 10 percent have borrowed from formal financial institutions. • Papua New Guinea has the lowest financial inclusion index of all Asia-Pacific countries, according to the IMF. (2018) 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 6/36#7Relevant Applied Literature From the development literature: • Women tend to make more future-oriented choices than men, especially when there are children in the household. This is evidenced by differential spending on things like children's education expenses and healthcare. ▸ Duflo, 2012 • Women and people with higher education tend to have lower discount rates. ▸ Bauer and Chytilova, 2010 2014 Road quality and remoteness contribute to poverty in PNG. Not only due to differences in human capital - infrastructure directly influences access to other resources. ► Gibson and Rozelle, 2003 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 7/36#8Relevant Theoretical Literature • Becker (1965), Gronau (1977): theory of the household • Becker and Mulligan (1997) - → develop a model of an individual's endogenously determined discount rate. Their analysis shows how wealth, mortality, addictions, uncertainty, and other variables affect the degree of time preference. 594 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 8/36#9Theoretical Framework • Model the household's decision as to whether or not to expend the resources required to become financially included. first attempt (to our knowledge) at a theory of household financial inclusion ► Sen (1987): members of HH face two types of problems simultaneously: ★ cooperation: adding to total availability ★ conflict: dividing total availability among household members ✰ decisions as to who does what, who consumes what, and who makes which decisions ⚫ incorporates the benefits that a household will receive by becoming financial included ▸ increased intertemporal trade: borrow/save ▸ increased intratemporal trade (increased efficiency in the allocation of household resources) <口> 594 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 9/36#10Theoretical Framework ●In maximizing household utility household's make two decisions: ① efficient allocation of household resources within a time period (comparative advantage) ★ produce goods self (autarky) or trade with economy (sell services of fop and buy goods) optimal allocation of expenditure across time ▸ involves a bargain within HH ⚫ NFI household: no intertemporal trade. ⚫HH's problem ▸ i. intratemporal: allocate resources across range of productive activities (within and outside HH) ★ choose between home production of some goods, trading for others by selling services of home factors of production ▸ ii. intertemporal: allocate consumption across time ★ borrow/lend <口> 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 10/36#11Intratemporal Trade: allocation of HH resources Household i (drop subscript) ▸ resource (Hicksian composite of physical and human capital, labor, land): L ▸ continuum of goods on j = [0,1] technology: unit labor requirement: a (j) for goods (differs across HHs) utility (C-D): In U = f³ Inc (j) • Choice: home production or sell labor services and buy goods • Assumption 1: household's productivity is declining in j 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 11/36#12Intratemporal Trade: allocation of HH resources firms produce goods under perfect competition ⚫ identical unit labor requirements a (j) (superscript e refers to economy) • ae (j) < a' (j) (households less productive in all goods) but distance means HHs produce some goods. ⚫ wage rate fixed at w so price of good j: p (j) set p(j) = 1⇒ a² (j) = ae for all goods == wae (j) 1 = by choosing appropriately sized units W ⚫ Given HH technology, rate at which the household can convert labor into good jis given by 1/a' (j). <口> 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 12/36#13Intratemporal Trade: allocation of HH resources • Work outside home, earn a wage w, the the household can convert labor into good j at the rate w/p (j) = 1/ae given that p (j) = 1 for all j. goods j where 1/a' (j) > 1/ae (j) produced at home goods j where 1/a' (j) < 1/ae (j) self labor services for the good outside the home. ▸ Simple case: cut-off good, j* is defined by 1 ai (j) = 1 ae W 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 13/36#14Intratemporal Trade: allocation of HH resources: distance ⚫ household lives a distance d away from markets ⚫ add ad valorem transport costs to goods, (1+ d) p (j) ▸ incurs this cost itself, or pays a higher price for delivered good ⚫ not being Fl means HH's wages are diminished due to transaction frictions/costs t (d): wage received w/ (1+t (d)) ▸ t t (0) = 0, t' (d) > 0. ▸ justification: costs of delivering cash (middlemen, stealing) ⚫ Hence, while labor can be converted into goods by firm j at rate w/p(j) = 1/ae (j), ⚫ Non-FI HHs located distance d from market, rate at which labor can be converted into goods is given by W p (j) (1+ d) (1+t(d)) cut-off good, jr, determined by 1 ae (1+d) (1+t(d)) (1+d) (1+t(d)) a (ji) = a² (1 + d) (1+ t(d)) Davies & Nettuno Financial Inclusion in Papua New Guinea W <口> 590 August 4, 2022 14/36#15Diagram 1 W 1 J p'a(j) 40 P(j)(1 + d) W p(j)(1 + d)(1 + t) 12 1 <口> 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 15/36#16HH Utility • Cobb-Douglas Utility: c (j) = Y/p (j) for all goods j ⚫ home-produced goods: c (j) = L/a (j) traded good: c (j) = wL/p (j) = L/ (aª (1 + d) (1+ t)). Non-FI HH (indirect) utility In UNF = √ In In -dj + a (j) S In L = - 0 1 In L ae (1+ d) (1+t) dj „ª³ In a (j) dj − (1 − ji ) In aº (1 + d) (1+ t) - - • If HH becomes Fl, t (d) fall to zero, cut-off good given by a (j): = ae (1+ d) FI HH (direct) utility In UFI Davies & Nettuno = S² In Li 1 Li dj + -dj a' (j) jz ae (1+ d) = In Li- - In a (j) dj (1j2) In aº (1 + d) 590 Financial Inclusion in Papua New Guinea August 4, 2022 16/36#17Proposition 1 • For a household that is not FI, the gain to becoming FI (moving from NFI to FI) in any time period is given by = AU In UFI-In UNFI 1 In a (j) ae (1+d) - dj + (1 − j) In (1 + t) > 0 ●Intuition: when a household becomes financially included, t falls to zero, Lemma and HH's terms of trade improve ▸ additional trade with the rest of the economy (first term above) ▸ traded inframarginal units of labor are also earning more, allowing higher consumption (second term above). The intratemporal gains from financial inclusion are decreasing in d, that (j† - jž) < 0 д ad is (AU) 1+d 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 17/36#18Intertemporal Trade: optimal allocation of consumption over time If HH is FI, can borrow / save • HH trades-off resource costs of becoming FI (incurred in the current period) against the benefits of a reduction in transaction costs now and in the future and the ability to trade intertemporally. Two period model: HH intertemporal utility: = U (E1, E2) In V1 (p, E1) + ẞ In V2 (p, E2) • B = 1/ (1+p) is the discount rate: p the discount factor ▸ lower p (or higher B) more patient HH E1 and E2 represent the household's expenditure in periods 1 and 2 Indirect utility function in any time period: In V (p, Y) = In YfIn p (j) dj. If HH is NFI then in both periods: E; = wL and HH utility is UNF (E1, E2) = (1 + ß) In L − (1 + B) √ In a(j)dj - d)(1 + t) − (1 + ß) (1 − j† ) In a² (1 + d Davies & Nettuno Financial Inclusion in Papua New Guinea 590 August 4, 2022 18/36#19Intertemporal Trade: optimal allocation of consumption over time • To become FI, HH must incur resource cost the first period, f (d) (iceberg cost fraction of each unit of labor melts away) - ▸ income in the first period is reduced to Y₁ = wL/ (1+ f (d)) (income in the second period remains at Y₂ = WL) f(0) = 0, f' (d) > 0 ▸ more remotely HHs have to incur higher costs to become Fl • FI HH can optimally allocate expenditure across time. • PV of wealth for FI HH, W, is W = wL WL 2+r+f + = WL 1+f 1+r where r is the economy-wide interest rate. 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 19/36#20Intertemporal Trade: optimal allocation of consumption over time HH optimization problem Maxε₁₂ In V (p, E₁) + ß In VΣ (p, E₂) subject to W ⚫ Solution: Euler equation: E2 = ẞ (1+r) E1 • ẞ (1+r) >1 HH savings in period 1⇒ E₁ < E2 = E2 E₁ + 1+r ⚫ HH reduces consumption on all goods, reallocates labor from home-produced goods to production outside of HH, and saves more. 2++) (1+0) UFI (E1, E2) = (1+B) In LIn (1 + f) + In ( 2+r+f 2+r+f +ẞIn - (1+B) In a (j) dj (1+f) (2+p) Davies & Nettuno (1+B) (12) In a² (1+ d) ADY 590 Financial Inclusion in Papua New Guinea August 4, 2022 20/36#21Proposition 2 The gain to financial inclusion is given by Δυ = UFI (E1, E2) - UNF (YNF, YNF) 2+r+f = - In (1+f) + In 2+P f) (1+1) + (1+ B) ·B) S a (j) In ae (1+ d) 2+r+f (1 + f) (2+p) - dj + (1 + ß) (1 − j ) In (1 + t) Intuition: 1st term is resource cost of FI = f (d); 2nd & 3rd represent the intertemporal gains from trade; 4th & 5th interpreted as in Proposition 1 Lemma The gains to financial inclusion are decreasing in distance, d. Lemma д ad (AU) <0 The gains to financial inclusion are decreasing in the discount factor. д (AU) < 0 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 21/36#22Diagram 2 Cost of FI, Benefit of FI Costs = f(d) = Benefits AU(p) distance 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 22/36#23Diagram 3 Cost of FI (f(d)), Benefit of FI (AU) f(d) p> p' AU(p') I AU(p) distance <口> 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 23/36#24Predictions of the Model • Characteristics of individual matter ↑ education ↓p (more patient) ▸ females are more patient: Pfemale Pmale ⚫ More patient households (lower p) ⇒ more likely to FI ▸ Education Female HoH Intra-HH bargain: HHs in which females have more bargaining power ► HHs where female is more educated than male ▸ Female HoH Distance matters ▸ distance increases the cost, and decreases the benefits of, FI ▸ more distant HHS less likely to FI <口> 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 24/36#25Data ⚫ 2014 World Bank-INA survey targeting financial inclusion, financial competency, and poverty • ~600 individual observations (2 respondents per household) • Respondents from each household were surveyed separately by same-sex interviewers to ensure more truthful answers. • Representative of Morobe and Madang provinces • Stratification of districts by female literacy and predicted poverty to get a representative sample • Weaknesses: ➤ Lack of funding; sample size smaller than intended. ► Lack of responses for financial information. 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 25/36#26Descriptive Statistics RURAL URBAN Variable Obs Mean Obs 38.35 Age 519 83 33 Mean 38.33 (1983) (18-65) Sex Primary Secondary 531 50% 84 48% 531 46% 84 35% 531 10% 84 30% Tertiary 531 10% 84 31% English 526 34% 84 80% 446.02 1114.52 Monthly Income 513 84 (5 - 10,000) (30 - 7,000) 6.11 Number of HH Members 531 84 (0-20) 6.55 (2-13) 66.20 2.89 Distance to Bank 460 77 (0.5 - 350) (0.5-6) 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 26/36#27Descriptive Statistics Urban (84) Bank Account Rural (531) Male 36.9% 14.7% Female 16.7% 6.6% Total 53.6% 21.3% Primary 16.7% 7.0% Secondary 14.3% 4.9% Tertiary 22.6% 6.8% English 48.8% 15.1% 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 27/36#28Descriptive Statistics Obs. Bank Account 0-20 km 316 122 20-40 km 58 22 40-60 km 17 4 60-100 km 48 3 100-200 km 33 0 No Access 143 7 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 28/36#29Empirical Specification where: Inclusion; =0+ B1 Age; + B2 Sexi + B3 Education; + B4 Income; + B5 HHMembers; +B6 Distance; + B7 Urban; + B8 English; • Inclusion; is a binary variable for being financially included • Age; is measured in years • Education; is a series of indicator variables for different the highest level of education achieved Income; is monthly income in Kina • HHMembers; is the number of people living in the household • Distance; represents the distance the respondent's house to the closest bank • Sexi, Urban;, and English; are all indicator variables Davies & Nettuno Financial Inclusion in Papua New Guinea 590 August 4, 2022 29/36#30Full Sample (1) BankAcct age 0.00206 (2) BankAcct 0.00179 (3) Bank Acct 0.00146 (0.00158) (0.00159) (0.00156) (4) BankAcct 0.00122 (0.00157) sex 0.139*** 0.127*** 0.129*** 0.118*** (0.0321) (0.0310) (0.0316) (0.0305) primary 0.0875*** 0.0762** 0.0406 0.0353 (0.0314) (0.0309) (0.0335) (0.0334) secondary 0.334*** 0.296*** 0.208*** 0.189** (0.0663) (0.0648) (0.0799) (0.0789) tertiary 0.506*** 0.447*** 0.386*** 0.346*** (0.0646) (0.0652) (0.0752) (0.0752) monthlyinc 0.0000704*** 0.0000677*** 0.0000638*** 0.0000623*** (0.0000213) (0.0000183) (0.0000206) (0.0000180) 0.0125* (0.00656) (0.00671) hhmembers 0.0118* (0.00655) 0.0122* (0.00670) 0.0122* urban 0.100* (0.0555) 0.0582 (0.0559) 0.0833 (0.0559) 0.0452 (0.0563) Dist Dummy -0.0533*** (0.00803) -0.0519*** (0.00801) english 0.153*** (0.0467) 0.130*** (0.0456) _cons -0.159** (0.0720) -0.0487 (0.0743) -0.139* -0.0313 N 584 584 (0.0722) 579 (0.0745) 579 Standard errors in parentheses *p<0.10, ** p < 0.05, *** p<0.01 Men are 12% more likely to be financially included Likelihood of having a bank account increases monotonically with education ⚫ Living farther away from a bank decreases the likelihood that a person has an account English-speaking is very important! English is taught in primary school. Effect of income: ►If monthly income increases by $100 likelihood of being financially included increases by 2.5% 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 30/36#31(1) Results Separately by Gender Female Sample (2) (3) BankAcct BankAcct age 0.000663 0.000585 BankAcct 0.000581 (0.00156) (0.00155) primary 0.0841** (0.0336) 0.0563* (0.0317) (0.0362) (0.00157) 0.0607* (4) BankAcct 0.000499 (0.00156) (1) BankAcct age 0.00353 (0.00241) 0.0384 (0.0347) primary 0.0953* Male Sample (2) BankAcct 0.00316 (0.00236) 0.123** (0.0565) (0.0554) (0.0574) (0.0570) (3) BankAcct 0.00252 (0.00236) (4) BankAcct 0.00218 (0.00231) 0.0439 0.0762 secondary 0.276*** 0.240*** 0.206* 0.188* secondary 0.355*** 0.338*** 0.224** 0.224** (0.0954) (0.0895) (0.108) (0.103) (0.0864) (0.0859) (0.103) (0.103) tertiary 0.713*** 0.649*** 0.648*** 0.601*** tertiary (0.0847) (0.0865) monthlyinc 0.0000354* 0.0000381** 0.0000331 0.0000365** (0.0000207) (0.0000183) (0.0000203) (0.0000181) (0.101) (0.101) 0.341*** 0.315*** 0.220** (0.0874) (0.0855) (0.102) (0.0995) 0.211** monthlyinc hhmembers urban 0.00119 0.00288 (0.00677) (0.00683) -0.0413 -0.0673 (0.0724) (0.0720) 0.000891 (0.00671) 0.00253 (0.00678) -0.0399 -0.0659 (0.0727) (0.0722) hhmembers 0.000150*** 0.000131*** 0.000138*** 0.000121*** (0.0000275) (0.0000270) (0.0000279) (0.0000275) 0.0196** 0.0183** 0.0210** 0.0195** (0.00949) (0.00925) (0.00951) (0.00925) urban 0.227*** (0.0854) 0.174** (0.0844) 0.187** (0.0860) 0.141* (0.0851) Dist Dummy -0.0407*** (0.00787) -0.0401*** (0.00791) DistDummy -0.0611*** (0.0129) -0.0602*** (0.0128) english 0.0721 (0.0608) 0.0531 (0.0585) english 0.177** (0.0718) 0.154** (0.0704) _cons -0.0161 0.0624 N 298 Standard errors in parentheses (0.0754) (0.0761) 298 -0.0106 (0.0761) 297 0.0678 (0.0770) 297 _cons N -0.165 (0.108) 286 -0.0586 (0.111) -0.148 286 (0.108) 282 -0.0425 (0.111) 282 *p<0.10, ** P < 0.05, *** P < 0.01 ** Standard errors in parentheses * p < 0.10, P < 0.05, *** P < 0.01 5929 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 31/36#32Interpretation • For women, financial inclusion is increasing in education. • For men, the effect levels out after secondary education. • Tertiary education effects for women are 2-3 times larger than the analogous effects for men 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 32/36#33Spillovers of Spouse's Education (1) BankAcct Female Sample (2) (3) BankAcct BankAcct (4) BankAcct age 0.000695 0.000617 0.000612 (0.00155) (0.00155) (0.00157) 0.000530 (0.00156) age (1) BankAcct Male Sample (2) (3) (4) BankAcct BankAcct BankAcct 0.00379 0.00338 0.00276 0.00237 (0.00240) (0.00236) (0.00235) (0.00231) primary 0.0967*** 0.0689** 0.0747** 0.0526 primary (0.0343) (0.0321) (0.0379) (0.0361) 0.108* (0.0554) 0.132** 0.0573 0.0860 (0.0547) (0.0568) (0.0568) secondary 0.304*** 0.268* *** 0.240** 0.222** secondary 0.369*** 0.350*** 0.243** 0.239** (0.0951) (0.0890) (0.111) (0.105) (0.0853) (0.0852) (0.102) (0.103) tertiary 0.738*** 0.674*** 0.678*** 0.631*** tertiary 0.372*** 0.341*** 0.253** 0.237** monthlyinc hhmembers 0.00125 (0.0812) (0.0827) SpouseGreater 0.0681** 0.0681** 0.0667** (0.0336) (0.0329) (0.0346) (0.0339) 0.0000344* 0.0000371** 0.0000324 0.0000358** (0.0000202) (0.0000177) (0.0000198) (0.0000175) 0.00293 0.00260 (0.00682) (0.00685) (0.00675) (0.00680) (0.101) (0.101) (0.0843) (0.101) 0.0653* SpouseGreater (0.0863) 0.113* 0.0920 0.0905 (0.0602) (0.0605) (0.0594) (0.0599) (0.0986) 0.0716 monthlyinc 0.000146*** 0.000128*** 0.000136*** 0.000119*** (0.0000276) (0.0000270) (0.0000280) (0.0000275) 0.000949 hhmembers 0.0167* 0.0160* 0.0184* (0.00947) (0.00927) (0.00949) 0.0175* (0.00927) urban -0.0504 (0.0711) -0.0765 DistDummy (0.0707) -0.0407*** (0.00785) -0.0487 (0.0716) -0.0751 (0.0710) urban 0.226** 0.175** (0.0872) (0.0861) 0.189** (0.0876) 0.143* (0.0866) -0.0403*** (0.00790) DistDummy -0.0587** (0.0130) -0.0586*** (0.0129) english 0.0654 (0.0626) 0.0461 (0.0602) english 0.165** (0.0714) 0.145** (0.0702) _cons N -0.0614 0.0170 -0.0539 0.0239 _cons -0.195* -0.0874 -0.170 (0.0773) (0.0768) (0.0784) (0.0779) 298 298 297 297 Standard errors in parentheses * p<0.10, ** p < 0.05, *** p < 0.01 N Standard errors in parentheses (0.106) 286 (0.109) (0.106) -0.0630 (0.110) 286 282 282 44x * p < 0.10, ** p < 0.05, P<0.01 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 33/36#34Interpretation • Women who have more educated husbands are 7% more likely to be financially included ⚫ The analogous result is not true for men. • Women are listening to their husbands... but it looks like men aren't listening to their wives. 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 34/36#35Heads of Households HoH Sample (1) age HH_has_acct 0.00417* (0.00247) (2) (3) (4) HH_has_acct HH_has_acct HH_has_acct 0.00388 0.00315 (0.00246) (0.00240) 0.00289 (0.00238) HOHgender -0.199** -0.255*** -0.236** (0.0936) (0.0893) (0.0965) -0.290* (0.0917) primary 0.102* 0.123** 0.0445 0.0672 (0.0589) (0.0580) (0.0583) (0.0581) secondary 0.396*** 0.376*** 0.234** 0.225** (0.0889) (0.0875) (0.105) (0.104) tertiary 0.397*** 0.354*** 0.252** 0.218** (0.0836) (0.0818) (0.0978) (0.0961) monthlyinc 0.000130*** 0.000120*** 0.000111*** 0.000102*** (0.0000289) (0.0000255) (0.0000301) (0.0000267) 0.0146 0.0163 0.0159 (0.0105) (0.0103) (0.0103) hhmembers 0.0149 (0.0106) urban 0.245*** 0.188** (0.0836) (0.0836) 0.202** (0.0843) 0.149* (0.0843) Dist Dummy -0.0590*** -0.0586*** (0.0135) (0.0134) english 0.216*** 0.202*** (0.0730) (0.0716) _cons 0.0435 (0.141) 0.196 (0.138) 0.0936 0.245* (0.141) N 287 287 283 (0.138) 283 .PNG has both matrilineal and patrilineal societies. Our 2-obs per HH dataset allows us to analyze the effect of the HoH's gender on financial inclusion of the household. • Households headed by a male are btwn 20% and 30% less likely to be financially included Standard errors in parentheses * p < 0.10, ** p < 0.05, *** p < 0.01 Davies & Nettuno 590 Financial Inclusion in Papua New Guinea August 4, 2022 35/36#36Policy Relevance and Conclusions • Gender and bargaining power within the household matters Education is important Policy Implication: free primary education is good Primary education is teaching students (enough) English to facilitate financial inclusion Distance is important ▸ Better roads Encourage financial institutions to locate in more remote locations ► Mobile banking as an option 590 Davies & Nettuno Financial Inclusion in Papua New Guinea August 4, 2022 36/36