Is Digital Financial Inclusion Unlocking Growth?

Purva Khera, Stephanie Ng, Sumiko Ogawa and Ratna Sahay

No 2021/167, IMF Working Papers from International Monetary Fund

Abstract: Digital financial services have been a key driver of financial inclusion in recent years. While there is evidence that financial inclusion through traditional services has a positive impact on economic growth, do the same results carry over for digital financial inclusion? What drives digital financial inclusion? Why does it advance more in some countries but not in others? Using new indices of financial inclusion developed in Khera et. al. (2021), this paper addresses these questions for 52 developing countries. Using cross-sectional instrument variable procedure, we find that the exogenous component of digital financial inclusion is positively associated with growth in GDP per capita during 2011-2018, which suggests that digital financial inclusion can accelerate economic growth. Fractional logit and random effects empirical estimation identifies access to infrastructure, financial and digital literacy, and quality of institutions as key drivers of digital financial inclusion. These findings are then used to help inform policy recommendations in areas related to the digitization of financial services to promote financial inclusion.

Keywords: A. literature review; digitization of financial services; capital markets department; growth rate; Digital financial services; number in bracket; regression equation; Financial inclusion; Mobile banking; Middle East and Central Asia; Caribbean; Asia and Pacific (search for similar items in EconPapers)
Pages: 30
Date: 2021-06-11
New Economics Papers: this item is included in nep-cwa, nep-dev, nep-fdg, nep-fle, nep-ict and nep-pay
References: Add references at CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=460738 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2021/167

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().