What Drives the Global Diffusion of Digital Finance? Socioeconomic and Demographic Determinants

Sya In Chzhen
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Sya In Chzhen: School of Economics, University of East Anglia

No 2025-03, University of East Anglia School of Economics Working Paper Series from School of Economics, University of East Anglia, Norwich, UK.

Abstract: This study investigates the global drivers for the adoption and usage of digital financial services (DFS) using three waves of repeated cross-sectional data from 160 countries, exploiting a pooled logit regression and the Heckman selection model. We predict the impact of proxies of digital financial services, including mobile money account ownership, mobile or internet transactions, as well as the ownership and usage of credit and debit cards, into the adoption and usage of digital financial services. While confirming findings from existing literature, our findings highlight several original insights. We find that the diffusion of informal digital financial services begins in countries with negative net migration, whereas the diffusion of formal digital financial services begins in countries with positive net migration. Population density is an adverse driver of adoption and usage of informal digital financial services, and of the transition from adopting to using debit cards. The historical level of digital infrastructure has a strong legacy effect on the usage of digital financial services, at both extensive and intensive margins. Population density is an adverse driver of adoption and usage of informal digital financial services and debit cards, as well as the transition from adopting to using debit cards. This study offers guidance to policymakers and other stakeholders by identifying the global determinants of both adoption and usage of formal and informal digital financial services, independent of market-specific contexts, and the key determinants influencing the transition from adoption to effective usage of specific digital financial services tools.

Keywords: Digital nance; Financial inclusion; Technological di usion; ROC (search for similar items in EconPapers)
JEL-codes: C35 G21 O33 (search for similar items in EconPapers)
Date: 2025-11
New Economics Papers: this item is included in nep-fdg, nep-fle, nep-iue and nep-pay
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