Impact of Digital Literacy on Financial Outcomes – A Cross-Country Analysis

Jovera Shakeel, Shehzil Munir, Schaff Mirza and Khan Abdullah

MPRA Paper from University Library of Munich, Germany

Abstract: The impact of digital literacy on financial outcomes has been well-explored. However, the onset of AI necessitates a pressing need for more granular, cross-country analyses that incorporate local variations in digital infrastructure and socioeconomic conditions. Using data from three sources in 82 countries, we employ a Directed Acyclic Graph (DAG) to examine both the direct and indirect effects of digital literacy on financial well-being. Our study uses two econometrics models, Ordinary Least Squares Regression (OLS) and Structural Equation Model (SEM), along with the machine learning approach of Random Forests. Our results confirm our initial hypothesis that digital literacy has a positive impact on financial well-being through financial inclusion. Through our models, we find that the indirect link through financial inclusion dominates the direct impact of digital literacy on financial well-being, as it accounts for socioeconomic, institutional, and individual factors.

Keywords: Digital literacy; Financial access; Economic outcomes; Human capital; Income distribution; Financial inclusion; Financial literacy; Economic development; Technological change; Data analysis (search for similar items in EconPapers)
JEL-codes: C13 C38 C45 D31 D83 G21 G23 J24 O15 O16 O33 (search for similar items in EconPapers)
Date: 2024-12-26
New Economics Papers: this item is included in nep-fle and nep-pay
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