SAJMS - South Asian Journal of Management Sciences

The Impact of Internet Connectivity on Financial Inclusion: Comparative Analysis between Developed and Developing Countries

Financial inclusion collectively develops economic growth in which persons can start their businesses or strengthen existing setups by getting loans from banks and any other source of microfinance schemes. The higher value of the financial inclusion index indicates better and easy access to the bank account, online payment systems, saving, lending, and borrowing. The research attempts to provide a comparative study on the impacts of internet connectivity on financial inclusion for developed and developing countries. The objective of the existing research is to analyze the impact of modern technologies, like internet connectivity and mobile cellular subscriptions, on financial inclusion. For this purpose, we make two models separately to study the impact of internet connectivity on financial inclusion in developing and developed countries, followed by a comparative analysis. In both models, we use the financial inclusion index as a dependent variable from 2004 to 2017. Other explanatory variables are Internet users, employment ratio, Regulatory Quality, Mobile Cellular Subscription, GDP, and Population growth. By employing the econometric technique of random effect and fixed-effect model, the study concluded that the financial inclusion index for both developed and developing countries is positively related to internet users. If Internet users increase in an economy, then financial inclusion also increases. At last, we provide some policy implications for creating an environment that contributes to improving financial inclusion.

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