This paper studies the effect of digital financial inclusion in banking on the poor and deprived populations of African emerging economies from 1997 to 2023.
Automated teller machines, mobile payments and mobile money transactions measure digital financial inclusion. Household consumption expenditure proxies poverty reduction. The autoregressive distributed lag analyzes the study.
The results indicate that automated teller machines, mobile money transactions and financial deepening positively affect poverty reduction, while mobile payments negatively affect poverty reduction. Digital financial inclusion decreases poverty via increased investment and empowerment.
Digital financial products and services should be expanded to all population segments in the economies. The governments should improve the quality and quantity of institutions that guarantee the operation of digital financial activities through the enforcement of law and order. The quality and quantity of mobile money transactions and financial deepening should be increased. The costs and charges involved in using automated teller machines and mobile payments should be regulated to relieve the burden on the population. The government should facilitate access to digital financial services via power supply, transport and telecommunication networks. Banks and telecommunications service providers should improve the payment system network to ensure cost-effective, convenient and secure financial service delivery. The digital infrastructure and financial services markets should be enhanced to fully capture the gains of financial inclusion and reduce poverty.
A literature review provides studies with conflicting findings on the effect of digital financial inclusion on poverty reduction. This study supports that digital financial inclusion decreases poverty.
