Socio-economic determinants of digital financial inclusion in SAARC countries

Abstract

Purpose – The purpose of this study is to examine the effects of individuals’ socio-economic factors on digital financial inclusion in the South Asian Association for Regional Cooperation (SAARC) countries. Design/methodology/approach – This study employs a quantitative research methodology following secondary data gathered from the World Bank. This study employs the Tobit and logistic regression models on the Global Findex Survey data comprising SAARC countries. In this study, a total of six indicators were considered for the development of a digital finance index. Findings – The findings substantiate significant effects of socio-economic characteristics in the adoption of digital financial services in SAARC countries. This study reveals that digital financial inclusion remains low in SAARC countries, and a gender gap exists in digital financial services. Additionally, the levels of low education and income, unemployment and rural areas contribute to the deterioration in SAARC countries. The findings further prove that the impact of individuals’ socio-economic characteristics varies across SAARC economies, implying regional differences. Research limitations/implications – The present study examines the determinants of digital financial inclusion by focussing exclusively on six socio-economic characteristics of individuals. Secondly, the present study did not account for the impact of digital finance inclusion on individuals’ socio-economic well-being. This study also did not consider the barriers to accessibility and usage of digital financial inclusion. Besides, this study only considers a single period to identify socio-economic determinants of digital financial inclusion in SAARC countries. Practical implications – Practitioners should improve the accessibility of digital financial services for individuals regarding the ownership of debit and credit cards and mobile money accounts. Besides, practitioners should also facilitate the execution of payments and the receipt of services through card-based, internet-based, and mobile-based financial transactions in remote areas. Furthermore, the findings underscore the necessity for broader participation of financial institutions and financial technology service providers in rural areas, owing to geographical inequities that lead to the financial exclusion of the marginalised rural individuals in SAARC countries compared to urban residents. This gap can be realised through a robust support system, sufficient technology infrastructure and competitive user fees. Besides, financial institutions are anticipated to consider users’ satisfaction and easy operational processes while developing new products and services. Originality/value – This study develops a digital finance index comprising six indicators and examined the effect of socio-economic factors, including demographic factors, on DFI in South Asian countries. Based on the author’s knowledge, a scarcity of studies has been considered to measure DFI and the effects of socio-economic and demographic factors in the South Asian region, collectively.