How does digitalisation influence financial inclusion in the emerging countries? – a cross-country comparison

Abstract

This research paper examines the impact of financial technologies in the emerging countries, with a special focus on cross-country heterogeneity in terms of financial inclusion. Although the level of financial digitalisation and access to financial services are diverse in the emerging countries most of them experienced the recent trend of digitalization in the past decade. Financial inclusion has improved globally in recent years, but with large heterogeneity among regions, and sometimes within the same country as well. In order to assess the level of inclusion, two new indices have been developed: one for the traditional dimensions of financial inclusion, and one for digital advancements. The empirical contribution of the paper shows that improvement in digital financial solutions are significant primarily in countries where the traditional financial inclusion is better. Some countries, such as Kenya, Uganda, Iran and Mongolia outperform their peers, while other countries still have room for further expansion in financial technology.