This paper aims to assess whether the coronavirus disease 2019 (COVID-19) pandemic has encouraged governments to take actions towards fostering digital means of payments and financial transactions to stimulate economic activities and achieve higher financial inclusion.
Using a logit model, this paper tests the impact of the level of income and GDP per capita, government effectiveness, digital adoption, number of commercial banks and the pandemic-related closure of business and stores due to full lockdowns on governments’ policy response regarding digital means of payments.
The author finds that low- and lower-middle-income countries had significantly responded to the surged need for digital means of payment during the pandemic compared to the upper-middle-income and high-income countries. The author also finds that government effectiveness and the number of commercial banks were predictors of government policy response, while the full lockdown of countries and the overall digital adoption were not.
Data of the post-COVID-19 pandemic are limited, and the sample size is small.
This is the first paper to empirically model governments' response during the pandemic to promote digital means of payments. This paper gives insight into post-crisis potential changes in digital payment adoption in the upcoming years.
