Financial Inclusion, Energy Access, and Poverty Reduction in BRICS Plus Economies

Expanding financial systems and energy infrastructure is widely assumed to reduce poverty, yet evidence on how these systems interact remains limited. This study investigates whether financial inclusion and energy access independently and jointly influence poverty reduction in BRICS Plus economies. Using a balanced annual panel dataset covering ten emerging economies across the Middle East, Africa, Asia, and Latin America over the period 2004–2023, the analysis employs two-way fixed effects with Driscoll–Kraay and Panel-Corrected Standard Errors to address heteroskedasticity and cross-sectional dependence. Poverty reduction is proxied by household final consumption expenditure per capita, while financial inclusion is measured through a principal component index and energy access by electricity access rates. The results show that energy access and financial inclusion individually exhibit negative associations with household welfare, suggesting that infrastructure expansion and financial deepening do not automatically translate into improved living standards when affordability constraints, tariffs, and financial costs are present. However, the interaction between financial inclusion and energy access is positive and highly significant, indicating strong complementarity. Financial systems enable households to convert electricity access into productive activities that enhance income and consumption. The interaction effect is particularly strong in lower-middle-income economies, while it weakens in higher-income contexts where financial and energy systems are already mature. The complementarity also declines during the COVID period, highlighting the vulnerability of development channels to global shocks. The study contributes to the literature by providing new evidence that the poverty effects of energy access depend critically on financial system inclusiveness. The findings underscore the importance of integrated finance–energy policies for advancing inclusive growth and sustainable development in emerging economies.