Does digital financial inclusion moderate or exacerbate output volatility?

Fintech, broadly encompassing financial innovations enabled by digital technology, has seen phenomenal growth across emerging and developing economies (EMDEs) over the last few years. While the fintech revolution can facilitate broader financial inclusion and spur overall economic growth, concerns h...

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Bibliographic Details
Published in:Applied economics letters 2022-11, Vol.29 (19), p.1804-1809
Main Authors: Gopalan, Sasidaran, Rajan, Ramkishen S.
Format: Article
Language:English
Subjects:
bank concentration
Bank technology
Digital financial inclusion
Digital technology
Economic analysis
Economic growth
Economic theory
Economics
Financial inclusion
Innovations
Longitudinal studies
output volatility
panel data
Technological change
Technology
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Summary:Fintech, broadly encompassing financial innovations enabled by digital technology, has seen phenomenal growth across emerging and developing economies (EMDEs) over the last few years. While the fintech revolution can facilitate broader financial inclusion and spur overall economic growth, concerns have been raised about the possible impact of fintech on growth volatility. Using a selected heterogeneous panel of 40 EMDEs spanning 2009 to 2017 we find that greater digital financial inclusion persistently exacerbates output volatility, although this result holds true only in countries with low banking concentration. Our results are robust to both different definitions of digital financial inclusion and alternative methodologies controlling for potential endogeneity.
ISSN:1350-4851
1466-4291
DOI:10.1080/13504851.2021.1963400