Abstract
Poverty alleviation has become one of the biggest challenges for many countries and access to financial services is considered to be a key driver of development and economic growth. Finding solutions that can break down barriers that poor people are facing to access formal financial services has become a major concern for researchers, governments, financial institutions. Financial services must reinvent themselves and the adoption of new technology is a crucial key to overhaul their operations and to find innovative solutions to manage customer expectations. The escalation in access and penetration level of mobile phones and the Internet can improve financial inclusion by facilitating easy access to financial services, by providing secure transaction platforms, by reducing transaction costs, by providing a competitive business framework. There has been relatively limited research on the impact of Internet and mobile phones use on financial inclusion, therefore our main purpose was to investigate this linkage in a sample of 11 post-communist countries of the European Union from 1996–2017 using panel cointegration and causality analyses. Firstly, we investigated whether mobile cellular phone subscriptions and the rate of Internet usage affect financial institutions’ access; secondly, we analysed the impact of these variables on financial market access. Results indicate that mobile cellular phone subscriptions positively affect both financial institution access in countries like Hungary, Latvia, Lithuania, Poland, and Slovenia and financial market access in Bulgaria, Croatia, and Hungary. Also, a negative relationship between mobile cellular phone subscriptions and financial institution access was noticed in the Czech Republic and regarding financial market access in the Czech Republic and Poland. Our findings also indicate both positive and negative relationships between Internet usage rates and financial institutions and financial markets access. By increasing Internet usage we can improve access to financial institutions in Bulgaria, Croatia, Czech Republic, Hungary, and Poland and we can increase financial markets access in Latvia and Slovenia.
Highlights
Our global economy, our societies, our lives are continuously transformed and reshaped driven by the progress in the information and communication technology (ICT) sector
Our paper contributes to the relevant literature in two dimensions: firstly, it is one of the early papers researching the impact of mobile phones and Internet use on financial inclusion focusing on a sample of 11 post-communist countries; secondly, the methodology used should provide more robust results given the heterogeneity and cross-sectional dependence of the sample
Different studies indicate that the expansion of mobile phones and Internet use have the potential to promote financial inclusion (Andrianaivo & Kpodar, 2012; Chatterjee & Anand, 2017; Seng, 2017; Bongomin et al, 2018; Lenka & Barik, 2018, Chinoda & Kwenda, 2019) which in turn will drive to the financial sector development (Rasheed et al, 2016; Anarfo et al, 2019)
Summary
Our societies, our lives are continuously transformed and reshaped driven by the progress in the information and communication technology (ICT) sector. We covered the period between 1996 and 2017 and our analyses was relied on the Westerlund and Edgerton (2008) cointegration test with structural break and Dumitrescu and Hurlin (2012) causality test regarding the cross-sectional dependence among the countries and the financial crises in the study period In this context, our paper contributes to the relevant literature in two dimensions: firstly, it is one of the early papers researching the impact of mobile phones and Internet use on financial inclusion focusing on a sample of 11 post-communist countries; secondly, the methodology used should provide more robust results given the heterogeneity and cross-sectional dependence of the sample. The paper has the following structure: Section 1 summarizes the empirical literature that investigated the relationship between mobile phones and Internet use and financial inclusion, Section 2 describes the dataset used and the proposed method, Section 3 presents the main findings and Section 4 briefly indicates concluding remarks, future research recommendations and some policy implications
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