Digital Financial Inclusion, Women’s Economic Empowerment, and Income Inequality in Pakistan: Evidence from 2010-2025

Abstract

Purpose: This article examines whether the expansion of digital financial inclusion is associated with lower income inequality in Pakistan and whether women’s economic empowerment transmits part of this relationship during 2010-2025. Design/methodology: The study uses a quantitative secondary-data design based on annual country-level observations. The empirical strategy combines descriptive statistics, trend analysis, correlation analysis, Augmented Dickey-Fuller tests, ordinary least squares estimation, mediation-oriented decomposition, and a parsimonious dynamic specification suitable for a short annual time series.

Findings: Digital financial inclusion increased from 0.00 to 100.00, women’s economic empowerment increased from 0.00 to 100.00, and the Gini index declined from 33.8 to 29.4 across the period. The direct regression model reports a negative and statistically significant relationship between digital financial inclusion and income inequality. When women’s economic empowerment is introduced, the digital inclusion coefficient falls in magnitude while the empowerment coefficient remains negative, which indicates partial transmission through the gender channel. The mediation-oriented estimates show that digital financial inclusion is strongly associated with women’s economic empowerment and that the indirect pathway accounts for 36.85 percent of the total association between digital inclusion and inequality.

Originality/value: The article contributes a Pakistan-specific time-series interpretation of digital finance, gendered empowerment, and inequality within one empirical framework. The evidence supports a gender-responsive digital finance strategy in which mobile accounts, digital payments, safe credit, financial literacy, labour-market participation, and consumer protection are treated as connected components of inclusive distributional policy.

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