ABSTRACT
The relationship between financial inclusion and poverty alleviation has been much discussed, but only few studies further explore the impacts of financial inclusion on household welfare. As a follow-up to the study of Gitaharie et al. (2013), this study is to analyse the differences in business development between business-owning households with bank loans and those without, and to analyse how business development affects the household welfare. The study also constructs a household welfare index from wealth, education, housing condition, and asset ownership indicators. The study collected primary data from business-owning households. The study employs two-stage regressions and finds that business-owning households with bank loans have a higher welfare index. The findings of this study could contribute to government policies on how to improve business-owning households and empower the owners to further improve their welfare.
