Gender Inequality and Poverty: The Role of Financial Development in Mitigating Poverty in Pakistan

Poverty and gender inequality are among the major issues in developing countries that can hinder their economic progress and human development. Hence, this research is designed to investigate the impact of financial development on gender imbalance and poverty in the context of Pakistan controlling a number of other variables using the Bayer and Hanck cointegration method and the ARDL bound test on the data from 1985 to 2022. The results of the study indicated cointegration among the variables. The long-run estimates unfolded that financial development decreases the gender imbalance (gender inequality) in the context of Pakistan; however, it boosts poverty levels in the country. In the context of control variables, we found that education is helpful in decreasing gender inequality in Pakistan while economic growth boosts gender inequality. Moreover, economic growth is a reliable tool to decrease the poverty level in Pakistan, and reducing gender inequality can help to alleviate poverty levels in the country. Surprisingly, education is mounting poverty level in Pakistan indicating that the education system in Pakistan is not providing quality education to poor people. Based on these results, the study suggests that government can focus on developing a strategic plan to decrease gender inequality and poverty by introducing suitable policies in the context of the financial sector, education, and economic growth.