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Digital and traditional financial inclusion : Trends and drivers

Author

Listed:
  • Mais Sha'Ban

    (JU - The University of Jordan)

  • Rym Ayadi

    (City University of London)

  • Yeganeh Forouheshfar

    (LEDA-DIAL - Développement, Institutions et Modialisation - LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres)

  • Sandra Challita

    (EM - EMLyon Business School)

  • Serena Sandri

    (GJU - German Jordanian University)

Abstract

This study examines the drivers of traditional and digital financial inclusion, emphasizing the catalytic role of digital inclusion in propelling traditional financial inclusion. Utilizing global data from 2004 to 2020, we construct two multidimensional financial inclusion indices: digital and traditional, and observe time trends. We then explore country-level determinants of traditional and digital financial inclusion with a special focus on banking system conditions. Finally, we investigate the role of digital financial inclusion in driving the traditional financial inclusion. Results show a significant improvement in financial inclusion over the period studied. The top countries for digital financial inclusion are primarily African developing nations, while high-income European countries lead in traditional inclusion. In terms of determinants, our main findings reveal that banking system conditions, mobile penetration, and urbanization significantly impact the level of digital and traditional financial inclusion. Moreover, we demonstrate that digital financial inclusion paves the way towards traditional financial inclusion in the medium term.

Suggested Citation

  • Mais Sha'Ban & Rym Ayadi & Yeganeh Forouheshfar & Sandra Challita & Serena Sandri, 2024. "Digital and traditional financial inclusion : Trends and drivers," Post-Print hal-04692539, HAL.
    • Handle: RePEc:hal:journl:hal-04692539
    DOI: 10.1016/j.ribaf.2024.102528
    as

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