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An index of digital financial participation for EU countries: Where does Luxembourg stand?

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  • John Theal
  • Pavel Dvorak

Abstract

We propose an index of digital financial participation to benchmark the level of engagement/participation of EU citizens in an increasingly digitalized financial system. Drawing on data from Eurostat, we adopt a number of variables that reflect households’ and individuals’ digital skills, digital access, digital device usage as well as other factors to first construct a series of sub-indices that measure different dimensions of digital financial participation. In a second and final step, we combine these composite sub-indices into an overall composite indicator of Digital Financial Participation for EU countries. The information contained in the weights of the sub-indicator variables, as well as the weights of the sub-indicators in the final composite indicator provide potentially useful information for policymakers to assess the potential barriers to digital financial participation and inclusion in the EU. We also construct the indicator using the multi-directional Benefit of the Doubt approach to obtain directional improvement vectors that can help to guide policymakers in fostering participation in digital financial activities and digital financial inclusion.

Suggested Citation

  • John Theal & Pavel Dvorak, 2024. "An index of digital financial participation for EU countries: Where does Luxembourg stand?," BCL working papers 191, Central Bank of Luxembourg.
    • Handle: RePEc:bcl:bclwop:bclwp191
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    More about this item

    Keywords

    Composite indicator; benefit of the doubt; data envelopment analysis; financial inclusion; digital inclusion; payments; digitalization; performance benchmarking;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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