Financial Inclusion and the Sustainability of Family Businesses: Impacts on Household Livelihoods

Abstract

In the context of the empirical literature, the potential of a family business and financial inclusion to drive household livelihood has been a subject of exclusion. Against this backdrop, this study empirically examines how family business and financial inclusion contribute to household livelihood in Saudi Arabia. This study is the first to empirically examine how family business and financial inclusion drive household livelihood using the instrumental variable probit model.  The study engaged the probit regression. However, to control for the issues of endogeneity, the study applied the instrumental variable probit regression with data sourced from the World Bank Global Financial Index 2021. Three indicators of financial inclusion were used, which are ownership of a financial account, debit card and online transactions. The results show that family business and financial inclusion are positively and significantly associated with household livelihood. This implies that the ownership of a family business is likely to improve household livelihood by 0.3. On the other hand, an increase in ownership of a financial account, ownership and usage of a debit card and online transactions is associated with the probability of a household being in the fourth and richest 20% income quantile by 0.4.