DIGITAL PAYMENT SYSTEMS AND FINANCIAL INCLUSION IN DEVELOPING COUNTRIES: PANEL EVIDENCE FROM 24 EMERGING ECONOMIES, 2010–2023

Abstract

We investigate the effect of digital payments on financial inclusion in 24 developing economies between 2010 and 2023. Using a balanced panel data from the World Bank Global Findex Database, World Development Indicators, and IMF Financial Access Survey, the study estimates Pooled OLS, Fixed Effects and Random Effects models to investigate the effects of mobile money adoption and digital payments on total account ownership, female account ownership and account ownership for the poorest 40% of the population. The Hausman specification test is used to inform model choice. The empirical results show that digital payments have a statistically and economically significant positive impact on overall account ownership (β = 0.927, p < 0.001) and financial inclusion of women (β = 0.876, p < 0.001), and mobile money adoption has a significant impact on the reduction of exclusion gaps among the poorest income quintile (β = 0.653, p < 0.00 The gender financial inclusion gap is largely driven by country-specific effects. The Friedman non-parametric tests validate the highly significant improvement across all Global Findex surveys (2011-2021) within countries. This research extends the burgeoning research on fintech-inclusion by offering panel evidence and policy insights for policymakers, regulators and development practitioners in the Global South.

Keywords: Digital payments, financial inclusion, mobile money, panel data, developing countries, gender gap, fintech