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Can digital technologies reshape rural microfinance? Implications for savings, credit, & insurance

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  • Elinor Benami
  • Michael R. Carter

Abstract

Rural microfinance must contend with the triple challenges of isolation, small‐scale transactions, and risk. These challenges result in information asymmetries and transaction costs that render markets for financial services costly or missing. This paper examines how emerging digital technologies (e.g., mobile money, digital credit scoring, and earth observation) can reshape rural markets for savings, credit, and insurance services, especially in developing countries. Although our synthesis of the literature suggests reason for hope in all three domains, the imperfections of these digital technologies require evaluation and oversight if the resulting rural financial system is to be more efficient and equitable than its predecessor. JEL CLASSIFICATION D14; F63; R51

Suggested Citation

  • Elinor Benami & Michael R. Carter, 2021. "Can digital technologies reshape rural microfinance? Implications for savings, credit, & insurance," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(4), pages 1196-1220, December.
    • Handle: RePEc:wly:apecpp:v:43:y:2021:i:4:p:1196-1220
    DOI: 10.1002/aepp.13151
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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