Digital Financial Inclusion: Its Role in Mitigating GDP Losses During the Pandemic

Abstract

Although COVID-19 has caused a global slowdown, the magnitude of GDP losses appears to vary across countries. This study considers the question: could digital finance help to mitigate the adverse impact of COVID-19 on GDP? Countries with higher levels of digital financial inclusion are found to experience less fall in GDP, whereas countries relying more on cash transactions experience a greater GDP decline. These results suggest that digital financial inclusion might play a key role in mitigating the adverse impact of COVID-19 on GDP.