Digital technologies, poverty and microfinance in developing countries

Abstract

PurposeThe objective of this study is to examine the moderating effect of microfinance on the digital divide in developing countries.Design/methodology/approachOn the methodology, the econometric method employed to estimate the equation is based on the two-stage least squares (2SLS).FindingsThis study confirms that microfinance can play an important role in mitigating the adverse effect of digitalization on poverty.Research limitations/implicationsThus, governments should prioritize and encourage the integration of digital technologies with robust microfinance systems to effectively combat poverty, given the importance of microfinance.Originality/valueGiven the importance of digital technology to businesses and economic development, we need to search for a better solution that allows digital technology to be further developed but at the same time, is not harmful to the poor. The issue of the poor, either financially or technically can be partially resolved if the poor is given the necessary and sufficient assistance. Therefore, this paper examines whether microfinance can be part of solutions to the digital divide in developing countries.