Asset accumulation, financial inclusion and subjective well-being: The role of financial formality in South Africa's households

Asset building and financial inclusion programmes have contributed to the enhancement of consumers' welfare through asset accumulation. Employing the FinScope consumer survey for South Africa, we extended the analysis of the relationship between financial inclusion and asset holding by examining whether this, in turn, improves consumers' subjective well-being (SWB). Financial inclusion was captured by credit, savings, and insurance whereas multiple correspondence analysis was employed to compute an asset index that captured indicators of individual material possessions. Results from the partial least squares path model suggested that financial inclusion had an indirect positive association with consumers' SWB through increased asset holding, but the association was more pronounced via formal channels of saving, credit, and insurance. As such, social policymakers are encouraged to integrate access to insurance, credit, and savings through formal channels in poverty interventions since this has a greater indirect association with consumers' SWB via increased asset ownership.