Does being financially empowered improve the wellbeing of women?

Purpose In recent years, women's empowerment has become a key focus in global development efforts, particularly in developing countries. However, the impact of financial empowerment on women's subjective wellbeing (SWB) remains understudied despite its potential significance for policy. We aim to fill this gap by examining the effects of financial empowerment on the SWB of women in India. Design/methodology/approach Using data from the Financial Inclusion Insights survey, this study measures financial empowerment through a multidimensional framework that captures both financial resources and agency. We employ regression analyses to examine the relationship between financial empowerment and women's SWB, complemented by robustness checks using Lewbel's two-stage least squares (2SLS), propensity score matching (PSM), coarsened exact matching (CEM) and alternative measures of SWB. Findings Our results show that an increase in the level of financial empowerment is associated with better SWB for women. This result is robust to different estimation approaches and alternative ways of measuring SWB. We also explore how each dimension of financial empowerment, i.e. agency and resources, affects women's SWB. Originality/value This study adds to the limited research on financial empowerment by examining its multidimensional nature and its effects on women's SWB. By analysing the distinct roles of financial resources and agency, it offers a nuanced understanding of this relationship. The findings provide practical insights for policymakers and development practitioners seeking to design more effective empowerment initiatives in developing country contexts.