Exploring the Impacts of Digitizing Financial Products and Services in Microfinance on Entrepreneurial Innovations in Sub-Saharan Africa

Abstract

Abstract This article seeks to explore the impacts of digitizing financial products and services in microfinance on entrepreneurial innovations. Utilising a recursive bivariate probit regression on panel data from 180 microfinance institutions in Sub-Saharan Africa spanning from 2019 to 2022, the primary findings are as follows: (i) a positive and significant influence of the digitization of microfinance products and services on the establishment and funding of startups; (ii) digitization stimulates the funding of the expansion of already established enterprises; (iii) these advantageous effects of digitization on entrepreneurial activities are more pronounced in urban areas than in rural areas; (iv) these digitization effects are more pronounced among men in comparison to women. Moreover, the digitization of microfinance products and services enhances startup funding by 27.35% more than the funding of the expansion of existing enterprises, by 25.36%. It is essential to augment financial innovations tailored to the needs of the clientele to nurture heightened entrepreneurial creativity. JEL codes : D 23, G19, M13, R51