Asymmetric Impact of Digital Finance on Poverty and Income Inequality Using NARDL Approach: Evidence from Indonesia

Mohammad Tarique () and Zia Malik ()
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Mohammad Tarique: Aligarh Muslim University Aligarh (AMU)
Zia Malik: Aligarh Muslim University Aligarh (AMU)

Journal of the Knowledge Economy, 2025, vol. 16, issue 5, No 23, 16236 pages

Abstract: Abstract The growing global demand for cellular devices and internet connection is a very significant advancement in promoting financial inclusion, changing the financial services environment in many low- and middle-income countries (LMICs). As per the World Bank report “Indonesia's Rising Divide,” there has been a rise in inequality inside the country. The wealthiest 20% of the population increased their spending from 45.98% in September 2022 to 46.71% in March 2023. The inequality is likely to culminate into the menace of poverty also. Using the asymmetrical NARDL model, the study determines how financial inclusion through digital finance has affected poverty and income inequality in Indonesia during the period 1999–2022. According to the findings, financial technology adoption can effectively lower rates of poverty and lessen income inequality over an extended period of time; nevertheless, the relationship is an asymmetrical one. So, there is a need to incentivize traditional financial institutions, and internet firms should augment digital financial goods and technology.

Keywords: Digital finance; Poverty; Income inequality; NARDL (search for similar items in EconPapers)
JEL-codes: C32 D63 G50 I32 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s13132-024-02454-2

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