Is Digital Financial Inclusion Unlocking Growth?
IMF Working Papers, June 11, 2021
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- Is Digital Financial Inclusion Unlocking Growth?
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Bibliographic details
- Authors: Purva Khera, Stephanie Y Ng, Sumiko Ogawa, Ratna Sahay
- Published: June 11, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513584669.001
Summary and main finding
- Research question: Do the positive impacts of traditional financial inclusion on economic growth carry over to digital financial inclusion? What drives digital financial inclusion and why does it advance more in some countries than others?
- Sample and period: 52 developing countries; growth in GDP per capita during 2011-2018.
- Main empirical result: Using a cross-sectional instrument variable procedure, 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.
Methodology and empirical approaches
- Indices: Uses new indices of financial inclusion developed in Khera et. al. (2021).
- Estimation techniques:
- Cross-sectional instrument variable procedure to isolate the exogenous component of digital financial inclusion.
- Fractional logit and random effects empirical estimation to identify drivers of digital financial inclusion.
Identified drivers of digital financial inclusion
- Access to infrastructure.
- Financial and digital literacy.
- Quality of institutions.
Policy implications and recommendations
- Findings are used to inform policy recommendations in areas related to the digitization of financial services to promote financial inclusion (policy areas implied: infrastructure expansion, literacy programs, institutional quality improvements).
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