Has financial inclusion made the financial sector riskier?

Peterson Ozili

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines whether high levels of financial inclusion is associated with greater financial risk. The findings reveal that higher account ownership is associated with greater financial risk through high nonperforming loan and high cost inefficiency in the financial sector of developed countries, advanced countries and transition economies. Increased use of debit cards, credit cards and digital finance products reduced risk in the financial sector of advanced countries and developed countries but not for transition economies and developing countries. The findings also show that the combined use of digital finance products with increased formal account ownership improves financial sector efficiency in developing countries while the combined use of credit cards with increased formal account ownership reduces insolvency risk and improves financial sector efficiency in developing countries.

Keywords: financial inclusion; digital finance; Fintech; financial technology; nonperforming loans; efficiency; financial innovation; insolvency risk; credit card; debit card; formal accounts; account ownership; black swan (search for similar items in EconPapers)
JEL-codes: G21 G28 O31 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ban, nep-cwa, nep-fdg, nep-fle and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Journal Article: Has financial inclusion made the financial sector riskier? (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:105529

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