Based on a review of existing literature, the authors find that the global gender gap in digital financial inclusion is 11 percent points and the rich-poor gap is 15 percent points. They then perform a regression analysis drawing from a wide range of datasets on digital financial inclusion; traditional financial inclusion; proxies for financial technology (fintech) such as fundraising; and measures of the digital divide by gender, income, and urban versus rural. The three main results are: (1) fintech positively correlates with financial inclusion, particularly digital financial inclusion; (2) fintech is significantly and negatively correlated with rural and class divides, meaning that it has the potential to reduce these inequalities; and (3) fintech has no significant correlation with the gender gap, and therefore seems not to impact it.
The authors also note that fintech is beneficial to small and medium-sized enterprises (SMEs). For example, “in many countries, digital financial services have facilitated the quick and efficient deployment of government support measures to firms and households affected by the COVID-19 pandemic.” However, while fintech contributes to reducing rural and class divides, its failure to lower the gender gap necessitates the development of new policy initiatives to support women’s financial inclusion.
This is a summary of a paper by Yoke Wang Tok and Dyna Heng, published by the International Monetary Fund, May 2022, 25 pages, available at https://www.imf.org/en/Publications/WP/Issues/2022/05/06/Fintech-Financial-Inclusion-or-Exclusion-517619.
By Sheen Gupta, Research Associate
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