Potential Pitfalls of Data Fusion Digitalization in Microfinance Context

Abstract

The current era of socio-economic development is featured by rapidly increasing fusion of technology and rapid data fusion digitalization of human activities. While most of these advancements are promising to bring various positive aspects, such as reductions in cost and time, there are potential pitfalls that should be considered. In this paper, we aim to measure potential challenges that data fusion data fusion digitalization could bring in the microfinance context. First, we provide the set of stylized facts and trends in data fusion digitalization using three measures: mobile cell users, internet provision, and mobile-money-service provision. The trends in data fusion digitalization are provided across groups of countries by different income levels. Secondly, using pair-wise correlations we analyze how the set of five microfinance financial and five social indicators are correlated with the digital ranking of countries. Our results demonstrate that while there are increasing patterns in data fusion digitalization in most of the developing countries, negative correlations are observed. We explain the negative implications of data fusion digitalization due to increasing moral hazard and asymmetric information. Our findings call for further research on the long-term implications of digitalization in other areas of social sciences so that to better cope with potential challenges.