Paper ID:
IJSDIP_September 2023_VOLUME 11_ISSUE 3 _247-252
Author's Name:
Dr.N Sridhar, Dr Y Raghunatha Reddy, Dr Gunda Surendra
Volume:
11
Issue:
Issue 3
Year:
2023
Pages:
247-252
Abstract
Digital financial inclusion may raise productivity by lowering transaction costs and widening access to payments, savings, and credit, yet its distributional effects depend on who can use digital services safely and productively. This study estimates cross-country associations between digital financial inclusion, subsequent economic growth, and income inequality. The explanatory variable is the share of adults who made or received a digital payment in 2021 from the World Bank Global Findex. It is linked to average real GDP-per-capita growth during 2022–2024 and the latest available Gini index during 2019–2024 from World Development Indicators. Ordinary least squares models use heteroskedasticity-consistent HC3 standard errors and control for 2021 log GDP per capita at purchasing-power parity and urbanisation. Across 130 economies, a ten-percentage-point increase in digital-payment use is associated with -0.072 percentage points of subsequent annual per-capita growth after adjustment (p = 0.583). Across 98 economies, the same increase is associated with a 0.751-point lower Gini index in the unadjusted model (p = 0.001), but the adjusted coefficient becomes 0.177 and statistically insignificant (p = 0.697). Thus, the raw inequality gradient largely reflects broader development conditions, while no independent short-run growth association is identified. The results support policies that combine digital access with affordability, skills, consumer protection, competition, and productive-use opportunities, and they caution against treating account or payment adoption alone as a causal engine of inclusive growth.
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