Digital Financial Inclusion: COVID-19 Impacts and Opportunities

Abstract

The COVID-19 pandemic has caused the acceleration of digitization and the consideration of digital financial inclusion as a means to minimize negative economic consequences and increase the resilience of households and SMEs. The purpose of this article was to assess the impact of the COVID-19 pandemic on digital financial inclusion by constructing and calculating an integral index of digital financial inclusion (DFI) based on Global Findex Database indicators. The approach to calculating the DFI index and two sub-indices that characterized passive participation in financial relations and active use of digital technologies was based on a linear mathematical model of the integrated indicator and on the use of the Fishburn formula to calculate the weight coefficients. The obtained results proved the acceleration of digital financial inclusion in 2021 and revealed significant differences in DFI between countries and groups of countries according to income level as well as problems of financial exclusion of the most vulnerable groups of population, especially in developing countries. The obtained results regarding the level of DFI are discussed from the point of view of COVID-19 impacts: both directly by influencing consumer behavior and decisions regarding digital financial services and from a broader perspective by influencing business entities, financial service providers, and regulation.