Digital finance, the Covid-19 effect, and the multidimensional aspects of disparities in financial inclusion
Description
Despite advancements, persistent barriers to financial serDespite advancements, persistent barriers to financial services continue to contribute to disparities in financial inclusion among developing countries. Undoubtedly, the shock induced by the Covid-19 crisis markedly influenced household behavior in terms of both adopting and utilizing digital financial services. This study explores the potential of digital finance to bridge the inclusion gaps in West Africa Economic and Monetary Union countries. Utilizing the World Bank Global Findex data from 2017 and 2021, along with heteroscedastic binary choice and double-difference methodologies, this study assesses the impact of digital finance across various demographics, including gender, age, income, geographical location and the Covid-19 effect. The initial results indicate a notable improvement in rural financial inclusion attributable to digital finance, which is marked by enhanced access and usage. However, gender-related outcomes have presented mixed findings, varying by country and year. A second category of findings reveals that, despite a general decline in average financial inclusion between 2017 and 2021, this trend was counterbalanced by the escalated adoption of mobile and digital financial services, a development largely attributed to the impact of Covid-19. These insights suggest policy recommendations centered on expanding mobile and Internet infrastructure and fostering digital identity and interoperability.vices continue to contribute to disparities in financial inclusion among developing countries. Undoubtedly, the shock induced by the Covid-19 crisis markedly influenced household behavior in terms of both adopting and utilizing digital financial services. This study explores the potential of digital finance to bridge the inclusion gaps in West Africa Economic and Monetary Union countries. Utilizing the World Bank Global Findex data from 2017 and 2021, along with heteroscedastic binary choice and double-difference methodologies, this study assesses the impact of digital finance across various demographics, including gender, age, income, geographical location and the Covid-19 effect. The initial results indicate a notable improvement in rural financial inclusion attributable to digital finance, which is marked by enhanced access and usage. However, gender-related outcomes have presented mixed findings, varying by country and year. A second category of findings reveals that, despite a general decline in average financial inclusion between 2017 and 2021, this trend was counterbalanced by the escalated adoption of mobile and digital financial services, a development largely attributed to the impact of Covid-19. These insights suggest policy recommendations centered on expanding mobile and Internet infrastructure and fostering digital identity and interoperability.