1 s2.0 S1566014121000509 Main

Emerging Markets Review 51 (2022) 100842
Contents lists available at ScienceDirect
Emerging Markets Review

journal homepage: www.elsevier.com/locate/emr
Fintech development and savings, borrowing, and remittances: A

comparative study of emerging economies☆
Angela C. Lyons a, *, Josephine Kass-Hanna b, Ana Fava c
a
University of Illinois at Urbana-Champaign, USA
b
Saint Joseph University of Beirut, Faculty of Business Administration and Management, Campus of Social Sciences, Huvelin Street, Beirut 1104
2020, Lebanon
c
Professora Adjunta Nível, Federal University of ABC – UFABC, Rua Arcturus, 03 – Jardim Antares, São Bernardo do Campo, SP CEP: 09606-070,
Brazil
A R T I C L E I N F O A B S T R A C T
JEL classification: Fintech is rapidly changing the financial landscape, especially in the post-COVID era. This study
D14 uses data from the world’s first global ranking of fintech ecosystems, the Global Fintech Index
G21 (GFI), to investigate the linkages between fintech development and demand for savings,
G23
borrowing, and remittances for 16 of the world’s largest emerging economies. Our results find a
G50
consistently strong and positive relationship between fintech development and financial inclu
O10
O33 sion. However, considerable heterogeneities persist across population groups and regions. Evi
O57 dence also suggests that access may not translate to greater usage of financial services. The
R20 findings have important implications for future models of financial inclusion looking to harness
Keywords: the power of fintech.
Fintech
Digital financial services
Financial inclusion
Emerging economies
Vulnerable populations
Financial security
1. Introduction
Fintech development is rapidly accelerating the expansion of digital financial services (DFS) and providing global citizens –
particularly the most disadvantaged – with access to faster, cheaper, and more efficient tools to manage day-to-day transactions,
protect against emergencies, and invest in education, health, and businesses (Thakor, 2020).1 This fintech era has been characterized
by a rapidly evolving financial services landscape and a growing range of new providers that includes mobile network operators
☆
We wish to thank Simon Hardie, CEO of Findexable, for his kind assistance with the data and support of this project. Any errors or omissions
are the responsibility of the authors.
* Corresponding author at: University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, 440 Mumford Hall,
1301 W. Gregory Drive, Urbana, IL 61801, USA.
E-mail addresses: anglyons@illinois.edu (A.C. Lyons), josephine.kasshanna@usj.edu.lb (J. Kass-Hanna), ana.fava@ufabc.edu.br (A. Fava).
1
DFS refer to financial services operated via the internet and mobile devices, including online banking and digital payment tools such as mobile
money and digital wallets, as well as peer-to-peer lending and remittance services.
https://doi.org/10.1016/j.ememar.2021.100842
Received 12 September 2020; Received in revised form 24 May 2021; Accepted 17 August 2021
Available online 19 August 2021
1566-0141/© 2021 Elsevier B.V. All rights reserved.
A.C. Lyons et al. Emerging Markets Review 51 (2022) 100842
(MNOs), technology companies, fintech startups, among others (Alliance for Financial Inclusion, 2018, 2020; Anagnostopoulos, 2018;
Arner et al., 2015; Tan et al., 2019).2 The COVID-19 pandemic has further sped up the transition to DFS and amplified the need for
contactless and cashless digital transactions. DFS and fintech have allowed for digital transactions amid social distancing and lock
down measures, as well as faster and more secure government payments and transfers to individuals and businesses most affected
(Agur et al., 2020; Pazarbasioglu et al., 2020; Sahay et al., 2020).
Emerging market economies have been increasingly committing resources to support fintech innovations, mainly through infra
structure development and relaxed regulations. Many also have been creating start-up hubs, accelerators, incubators, and public-
private partnership programs (e.g., Start-Up Chile, Start-Up Brazil, and IncubAR in Argentina) that provide financing, technical
assistance, and networking to fintech start-ups (Rodstrom, 2020; AFI, 2020). These new market players are reshaping the financial
services industry in ways that are benefiting consumers both directly and indirectly. Using the latest technology to come up with
innovative, cost-effective products, they complement the services of traditional providers by offering faster services with better
transparency and improved consumer experiences, which benefit all. Those groups, typically referred to as the under- and unserved,
are thought to benefit from these lower-cost and flexible conditions that have been brought about by digital advancements (e.g., little
or no collateral requirements for credit extensions). As for the indirect benefits, these are the result of emerging competition between
new entrants (e.g., fintech companies) and existing providers (e.g., traditional financial institutions and mobile money providers). The
competitive pressure urges the latter, especially banks, to respond by acquiring fintech startups, cooperating with fintech companies
(e.g., alliances, outsourcing of DFS), and/or investing heavily in fintech innovations internally (Clavijo et al., 2019; Sahay et al., 2020).
These dynamics are resulting in a broader choice of quality products for consumers and are increasing the likelihood of access to
convenient services for vulnerable populations.
From this perspective, DFS promises greater financial inclusion, which in turn, assists individuals in building financial resilience
and achieving long-run financial security (Demirgüç-Kunt et al., 2018; G20 Global Partnership for Financial Inclusion, 2016, 2017;
Kass-Hanna et al., 2021; Lyons et al., 2020). With ever-growing mobile and internet penetration rates, DFS have transformative po
tential to reach the nearly two billion unbanked adults, mostly living in the developing and emerging world (Demirgüç-Kunt et al.,
2018; GSMA, 2017, 2020; Manyika et al., 2016). However, with the shift to digitalization, there also are growing concerns that fintech
may be hindering financial inclusion for vulnerable populations who are most at-risk of being left behind. The central question that has
emerged is: To what extent, if any, does fintech foster demand for and usage of financial services, especially for populations tradi
tionally excluded from the financial markets?
Our study is among one of the seminal works to robustly investigate this relationship by taking advantage of the recent release of
the world’s first global ranking of fintech ecosystems – the Global Fintech Index (GFI). The GFI is an industry tool that scores countries
based on the size of their fintech ecosystems, their overall performance, and the business environment. In the absence of a widely
accepted and standardized measure of fintech development, this new index is a valuable tool to assess fintech ecosystems and make
cross-country comparisons. We link the GFI data with micro-level data on individuals’ access to and usage of financial services taken
from the World Bank’s Global Findex. By combining the GFI and Findex data, we are able to assess the effects of fintech development on
the demand for savings, borrowing, and remittances across 16 emerging economies with varying levels of fintech and financial in
clusion development, spanning 5 regions of the world. Focusing on emerging countries is particularly important, as their rapidly
evolving technological, financial, and regulatory infrastructures have fostered investments in fintech and driven innovations in
cutting-edge DFS (Fung et al., 2020). The emerging economies are among those countries best positioned to be game changers when it
comes to the advancement of new fintech products and services, which are able to provide affordable and safe access to excluded
populations.
Our study contributes to the literature in the following key respects. First, we conduct a cross-country comparison of fintech
development for emerging economies using the Global Fintech Index (GFI), which to our knowledge, is the first direct multidimensional
measure of fintech development. Second, we rely on this measure to examine the relationship between fintech development and
several measures of financial inclusion. Our analysis goes beyond account ownership to include formal and informal savings and
borrowing, emergency preparedness, and the sending and receiving of remittances. Third, we examine heterogeneities in the rela
tionship between fintech and financial inclusion across vulnerable populations by age, gender, education, and socioeconomic status.
We also take into consideration regional differences. The findings from this research have important implications for key public and
private-sector stakeholders in emerging countries who are considering the groundbreaking role that fintech and other digital tech
nologies can play in the development of new models for financial inclusion. This research also provides a useful foundation for other
researchers who are interested in investigating the relationship between fintech and financial inclusion.
The remainder of this paper is structured as follows. The next section provides an overview of the literature. This is followed by a
description of the data and how the main variables were constructed. The empirical models and preliminary results are then presented.
The final section summarizes the key findings and discusses important policy implications for emerging economies.
2
For the purposes of this study, fintech is defined to be a contraction of “financial technology,” which refers to technology enabled financial
solutions.
2
2. Background and literature review
2.1. Measuring financial inclusion
An overview of the literature on financial inclusion reveals that no single definition nor standard measurement method has been
universally adopted. Scholars are increasingly acknowledging the multidimensional nature of financial inclusion and are capturing it
through supply-side and demand-side indicators. Most, however, focus on the same basic definition which includes some combination
of factors related to access, usage, and quality (Cáamara and Tuesta, 2014; Lyons et al., 2020; Park and Mercado, 2018; Sarma, 2008).
Among policymakers, access and usage have been at the core of definitions and frameworks for financial inclusion (G20 GPFI, 2016;
Irving Fisher Committee on Central Bank Statistics, 2015; Mialou et al., 2017; The World Bank, 2015). Efforts, though, to foster usage
of financial services have proved to be less successful than those aimed at expanding access (Lyons et al., 2020). In fact, growing
evidence shows that advancements in access do not necessarily lead to increased usage (Dupas et al., 2018), especially via digitali
zation. In several emerging economies (e.g., China and India), the push towards account uptake has not driven increases in account
usage. Many bank and mobile money accounts have remained inactive and are not being used to deposit or withdraw money, nor are
they being used to save (Demirgüç-Kunt et al., 2018; Salazar et al., 2018).
This revelation has resulted in a shift in policy priorities, where the end goal of financial inclusion now focuses on increasing both
account access and account usage. In this way, financial inclusion is now perceived to be a dynamic pathway to building financial
security and reaching broader micro- and macro-economic outcomes (CGAP, 2019; Hussain et al., 2019; Moore et al., 2019). Financial
inclusion can only achieve impact when those who have access to financial services use them consistently and responsibly to save,
borrow, and transfer money. It is, after all, these behaviors that build resilience in the face of economic vulnerabilities, and lead to the
ultimate development outcomes (Kass-Hanna et al., 2021; Salazar et al., 2018; WEF, 2018).
2.2. The digital financial services landscape
The recent and rapid expansion of DFS holds the most promise for boosting financial inclusion, given its potential to address supply-
side barriers to access (e.g., high costs, information asymmetries, limited geographical penetration, and low competition and inno
vation), along with demand-side barriers to usage (e.g., lack of identification, trust, literacy, and reliance on the informal sector). A
growing number of studies are now investigating “digital” financial inclusion (Kass-Hanna et al., 2021; Lyons et al., 2020; Senyo and
Osabutey, 2020). Some studies have investigated the impacts of mobile phone usage and DFS on a wide range of financial behaviors,
including account ownership, savings, borrowing, and payments (Agyekum et al., 2016; Bharadwaj et al., 2019; Gammage et al., 2017;
Kass-Hanna et al., 2021; Ouma et al., 2017). Others have focused on the factors driving mobile money adoption and the impacts of
mobile money on remittances and welfare measures related to poverty and income inequality (Apiors and Suzuki, 2018; Aron, 2018;
Demombynes and Thegeya, 2012; Grootenhuis, 2019; Lee et al., 2018; Mbiti and Weil, 2015; Munyegera and Matsumoto, 2016; Seng,
2017; Wieser et al., 2019). While the results have sometimes been mixed, the general consensus is that digital financial inclusion,
whether it be in the form of mobile money or other DFS, leads to greater financial and economic inclusion.
Within emerging economies, the dynamics of an evolving DFS ecosystem are very different from those observed in developed
countries, which have been characterized by high levels of banking penetration, solid infrastructure, and competitive market envi
ronments (AFI, 2019). In advanced economies, the digitalization of financial services has been led by the traditional banking sector,
while non-bank providers such as retailers, online payment providers, and governments have followed suit (AFI, 2019). In developing
and emerging markets, non-bank providers have been more active and have experienced more rapid growth. For example, mobile
money services have quickly transformed the financial landscape in these largely cash-based economies, leapfrogging ahead of con
ventional banking services. Countries in Sub-Saharan Africa and South Asia have experienced some of the largest growth in mobile
money and digital money transfers in the last decade (Alexander et al., 2017; Demirgüç-Kunt et al., 2018; Kass-Hanna et al., 2021;
Lyons et al., 2020). Most recently, Latin America has also seen increases in access to and usage of mobile money and other DFS, brought
about by fintech disruptions on the supply side (Clavijo et al., 2019; Roa et al., 2017). Studies have found that traditional financial
service providers are largely responding to rising competition from fintech companies by cooperating with them.
2.3. Linkages between fintech development and financial inclusion
Research examining the relationship between fintech development and the uptake and usage of financial services is still relatively
sparse. Most of the emerging literature focuses almost solely on mobile money, as previously noted. Few studies have investigated how
changes in the broader fintech ecosystem are effecting financial service usage more holistically. This dearth of research is due mainly to
the lack of reliable and comprehensive supply-side data on fintech and DFS availability, as well as limited demand-side data on the
uptake and usage of DFS. A few attempts have been made to better understand the fintech-financial inclusion relationship using
available data. A recent study by the International Monetary Fund (IMF) used data from the World Bank’s Global Findex and the IMF
Financial Access Survey (FAS) to construct indices for traditional and digital financial inclusion and examine whether DFS were
improving financial inclusion (Sahay et al., 2020). For insights about fintech’s role, the authors relied on interviews from fintech
companies, central banks, and banks. The indices for traditional and digital financial inclusion were constructed from data sources and
methods commonly used by other researchers (Allen et al., 2016; Kass-Hanna et al., 2021; Park and Mercado, 2018; Sarma, 2008).
However, many of the indicators included in the indices were basically “proxies” for key demand and supply-side factors, serving as
indirect measures for assessing digital access and usage at the macro level.
3
In a few other reports, Patwardhan et al. (2018) and Citi (2020) conducted interview-based studies with fintech providers and
regulators to provide more insight into the potential impact of fintech development in enhancing financial inclusion outcomes. Their
findings were consistent with those of the IMF (Sahay et al., 2020), but relied mainly on qualitative and case-based evidence. Frost
(2020) gathered country-level data from a number of macro data sources and showed that market failures related to unmet demand for
financial services and country demographics (especially related to age) were key factors affecting fintech adoption across countries.
However, this study was primarily descriptive in nature.
A few other studies have examined the relationship between fintech and macroeconomic factors such as financial stability, eco
nomic growth, and financial sector performance (Anagnostopoulos, 2018; Claessens et al., 2018; FSB, 2017, 2019; Fung et al., 2020;
Sangwan et al., 2019; Thakor, 2020). Overall, these studies have tended to find positive relationships. For example, Claessens et al.
(2018) found that higher income countries with less competitive banking systems had more robust fintech credit markets, especially in
terms of credit activity and volume. Thakor (2020) reviewed the emerging literature on fintech and found positive linkages with
innovations in payment systems, credit markets, insurance products and other financial services. Others examined the positive in
fluence of fintech on financial stability via innovations in blockchain technologies and decentralized ledger systems (FSB, 2017, 2019;
Zamani and Giaglis, 2018), as well as enhancements in transparency and reductions in information asymmetries brought about by big
data (Guérineau and Leon, 2019; Kosmidou et al., 2017). Fung et al. (2020) considered the effect of fintech development on the
stability of financial institutions in 84 countries between 2010 and 2017. They found that fintech decreased the fragility of financial
institutions in emerging financial markets, while increasing it in developed markets.
To date, very few studies have linked the supply-side aspects of fintech development to the more micro-level factors such as
household’s financial decisions and demand for services. Instead, the focus has been on examining the factors that influence house
holds’ potential demand for fintech services – and in particular, households’ intentions and willingness to switch from traditioanl
financial services to fintech. Those factors most likely to drive fintech demand have been related to households’ performance ex
pectations, perceived risks, trust, levels of financial expertise, and preferences for transparency (Jünger and Mietzner, 2020; Senyo and
Osabutey, 2020). Tan et al. (2019) used data collected from a small sample of younger consumers who were familiar with or had used
fintech. They found convenience, speed, and cost were also key factors influencing demand for fintech.
While informative, the findings from all of the above-mentioned studies were based on relatively small and selective samples that
were not representative of their individual countries. This has made it difficult to determine the representativeness of the findings and
the implications for larger populations. We address this limitation by using data collected from representative samples across multiple
countries.
3. Data
The World Bank partnered with Gallup World Poll in 2011, 2014, and 2017 to collect cross-sectional data from approximately
150,000 adults in over 140 countries, representing the most comprehensive database on financial inclusion worldwide. This study uses
micro-level data from the most recent round, the 2017 World Bank Global Findex database, which includes more detailed questions on
the usage of DFS. For each country, nationally representative samples of at least 1000 households were randomly selected and
interviewed to gather in-depth information on how individuals were saving, borrowing, making payments, and managing financial
risk. The samples were taken from each country’s civilian, noninstitutionalized population aged 15 or older. Weights were constructed
to ensure nationally representative samples, using both a base sampling weight and a post-stratification weight. The base sampling
weight adjusted for unequal probability of selection based on household size. The post-stratification weight adjusted for sampling and
nonresponse error related to each country’s population statistics by gender, age, education, and socioeconomic status. See Demirgüç-
Kunt et al. (2018) and the World Bank (2018a, 2018b) for a complete overview of the data, sampling, and survey methodology.3
For the purposes of this study, we focused on the financial inclusion data that were collected from 16 emerging economies – the 10
big emerging economies (BEM) (Argentina, Brazil, China, India, Indonesia, Mexico, Poland, South Africa, South Korea, and Turkey)
and 6 other rapidly-developing economies (Chile, Colombia, Malaysia, Nigeria, Russia, and United Arab Emirates (UAE)).4 The initial
sample for the 16 countries included 21,674 observations. However, some observations had to be dropped due to missing information
for key financial inclusion measures and demographics. The final sample consisted of 21,121 observations. The following section
describes how these data were used to measure an individual’s level of financial inclusion.
3.1. Measuring financial inclusion
Financial inclusion, in and of itself, is not the end goal. It is, however, key to building financial resilience of individuals and
households (Kass-Hanna et al., 2021). Engaging in “positive” financial behaviors and practices can lead to financial security, and
ultimately, financial resilience (Hussain et al., 2019; Salignac et al., 2019). The Global Findex includes micro-level information on
respondents’ account ownership, formal and informal savings, and borrowing behaviors. The more recent 2017 survey also includes
information on domestic remittances sent and received and the method of delivery used (e.g., financial institution, mobile phone,
money transfer organization (MTO), or cash).
3
The individual-level data can be downloaded at: http://www.worldbank.org/globalfindex.
4
Note that these countries span five regions – Latin America and Asia (five countries each), as well as Africa, Europe, and the Middle East (two
countries each).
4
Using the Global Findex data, account ownership was defined using two measures: (1) whether respondents had an account at a
bank or another type of formal financial institution5 and (2) whether respondents had a mobile money account (MMA).6 Savings
behaviors were identified according to: (1) whether respondents had saved or set aside any money in the past 12 months; and (2)
whether they had saved using a bank or other formal financial institution (formal saving); or (3) whether they had saved using an
informal savings group/club or a person outside of the family to save money (informal saving). An additional measure of savings was
created to capture whether respondents would be able to come up with an emergency fund (1/20 of gross national income (GNI) per
capita in local currency) within the next month if needed. The variables related to borrowing were constructed based on: (1) whether
respondents had borrowed money in the past 12 months; and (2) whether they had borrowed from a bank or other formal financial
institution (formal borrowing); or (3) whether they had borrowed from family, relatives or friends, or an informal savings group/club
(informal borrowing). Taking into consideration both formal and informal savings and borrowing is important as informal markets and
social networks continue to play a significant role in households’ livelihoods and overall financial well-being, especially in emerging
economies. Given the importance of informal markets and social networks, our analysis also considered domestic transfers received
and sent, as well as the channel of delivery. Specifically, variables were defined to capture: (1) whether respondents had sent (or
received) money in the past 12 months to a relative or friend living in a different area inside the country; (2) whether they had sent (or
received) the funds through a bank or other formal financial institution; and (3) whether they had sent (or received) the funds via a
mobile phone.7
We also utilized information on respondents’ ownership of mobile phones and usage of digital technologies (e.g., mobile phones
and the internet) to conduct basic financial transactions. For example, respondents were asked whether they had used the internet to
pay bills or make online purchases. They were also asked whether they had used their mobile phone to pay their utility bill or to receive
wage payments. Respondents who had a financial account were also asked whether they had used their mobile phone or the internet to
access their account and/or check their account balances.8
In addition, other respondent-level characteristics were included to account for age, gender, education, and employment status (i.
e., whether they had worked for paid employment in the past 12 months and whether they had worked in the public sector). Income
was also taken into consideration using quintiles based on households’ income per capita, where income was defined as total monthly
income in local currency before taxes. The lowest income quintile was used to identify the poorest 20% of a country’s population.
Respondents who reported receiving government assistance such as transfer payments for educational or medical expenses, unem
ployment benefits, subsidy payments, or any other kind of social benefits were also identified.
3.2. Measuring fintech development
Our main explanatory variable is a country-level index that captures the scale and development of the fintech sector in each
country. Specifically, we constructed our measure using the newly-released Global Fintech Index (GFI) developed by Findexable
Limited.9 The GFI was released in December 2019 and is the first global index to use a common set of metrics and the same algorithm
across locations worldwide to generate a score that ranks the fintech ecosystems of more than 65 countries and 230+ global cities. The
GFI was developed to score and rank countries and cities based on three dimensions:
1. the quantity, or the number of fintech companies, fintech hubs, co-working spaces, accelerators, global influencers, etc. (size of the
fintech ecosystem);
2. the quality, or the impact of fintech companies, based on factors such as size, growth, investment, web presence, monthly visits,
customer base, website ranking, events, international collaboration, number of unicorns, etc. (performance of the fintech
ecosystem);
3. the environment, which is a measure of the ease of doing business and attractiveness of a specific country based on technology
infrastructure, critical mass, regulatory environment (incentives for start-ups, payment portals), etc. (business environment).
The Global Fintech Index 2020 report (Findexable Limited, 2019) published the raw GFI scores and rankings for the 65 countries.
The higher the overall score, the better the ranking. The scores ranged from as high as 31.789 for the United States (ranked #1) to as
low as 3.941 for Lebanon (ranked #65). Each country’s raw score was calculated as the sum of the scores for the three dimensions for
quantity, quality, and environment, using an in-house proprietary algorithm.
5
Besides banks, other formal financial institutions could include credit unions, microfinance institutions, cooperatives, or post offices (if
applicable).
6
In general, mobile money is a service that stores and manages funds in a secure electronic account that is linked to a mobile phone number.
Individuals can use their mobile money account (MMA) to send or receive money, pay bills, make purchases, etc. Data on ownership of MMAs were
not collected in 2017 from respondents living in China, Poland, Russia, and South Korea, so analysis related to MMA ownership is based on a
reduced sample size of 13,718 observations.
7
Data on informal savings and remittances were not collected from respondents living in South Korea and the United Arab Emirates, so analysis
for these financial behaviors is based on a reduced sample size of 19,144 observations.
8
Since accessing an account and checking an account balance are conditional on having a financial account, they are included in the descriptive
statistics but not in the regression analysis.
9
For more details, visit: https://findexable.com/.
5
To conduct our analysis, we used the scores for the three dimensions for each of the 16 emerging economies. The scores, however,
were quite heterogeneous – they varied in range, as well as the number of indicators used to compute each dimension. In this way,
dimensions with more indicators – and therefore larger ranges and higher scores – received more weight. To ensure comparability and
equal weighting across the three dimensions, we adopted a normalization and aggregation methodology similar to that used by the
UNDP to construct the Human Development Index (HDI) and the Sustainable Development Goals Index (SDGI) (Lafortune et al., 2018;
UNDP, 2019). This standard methodology involved a two-step procedure. In the first step, we took the raw dimensional scores for the
GFI and used the min-max method to normalize them for each country using the following equation:
actual scored –minimum scored
Normalized Dimension Scored = Sd = , (1)
maximum scored –minimum scored
where S represents the score for the dth dimension for d = {quantity, quality, and environment}. In the second step, the “new” GFI score
was calculated by aggregating the normalized scores for the three dimensions using the geometric mean approach. The geometric
scores for each country were rescaled from 0 to 100, denoting worst and best performances, respectively. Specifically, the geometric
GFI scores were computed for each country as:
( )1/3
Geometric GFI Score = SQuantity .SQuality .SEnvironment × 100, (2)
where SQuantity, SQuality, and SEnvironment refer to the normalized scores for the three dimensions. The geometric mean method is often
used to aggregate heterogeneous variables with limited substitutability, and in cases where the focus of the analysis is on percentage
changes instead of absolute changes (Lafortune et al., 2018). This “new” GFI score, which we will now refer to as the “geometric GFI
score,” serves as the baseline measure in our study for assessing the relationship between fintech development and households’
financial decisions.
Fig. 1 compares the geometric GFI score to: (1) the raw GFI score, which is simply the sum of the original dimensional scores
reported in the Global Fintech Index 2020 report (Findexable Limited, 2019); and (2) the normalized GFI score, which uses the min-max
method in Eq. (1) to normalize only the raw GFI score (and not the individual dimensions) so as to rescale it from 0 to 100. Countries
are presented in ranked order according to their geometric GFI score. From this visualization, we observe that there is very little
variation in the raw GFI score, which can make it difficult to tease out differences in fintech development across countries. Also, it
aggregates the values across all the indicators for all three dimensions such that there is no maximum value. This makes it difficult to
interpret the meaning of a “one-unit” increase or decrease in fintech development. The normalized GFI score rescales the raw score and
assigns values between 0 and 100, which creates more variation and makes for easier interpretation and comparisons across countries.
However, the normalized score still assigns equal weights to each indicator, but not equal weights to each dimension. For these key
reasons, we normalized the scores for each dimension and assigned equal weights using the geometric mean approach. As Fig. 1
visually illustrates, the geometric GFI score is preferable to the raw and normalized scores.
Fig. 1. Comparison of Global Fintech Index (GFI) Scores.
6
Also, note that the data used to calculate the original dimensional scores and the raw GFI score were collected in 2018 and 2019,
reflecting fintech development elements gathered after 2017, the year in which the respondent-level Global Findex data were being
collected by the World Bank. Therefore, there could be a timing issue when investigating the relationship between fintech development
and financial inclusion. Even so, using the GFI score is still very informative, as fintech ecosystems of countries reporting higher scores
in 2018 and 2019 were likely to also have had higher levels of fintech development in 2017. This index can be used to better assess
progress towards digital financial inclusion and compare outcomes across emerging economies.
Finally, other country-level fintech characteristics were included in our analysis to make additional comparisons across the
emerging economies. These metrics were related to: (1) information and communications technology infrastructure (e.g., mobile
phone subscriptions, fixed broadband subscriptions, percentage of internet users, as well as internet inclusiveness and mobile con
nectivity), (2) regulatory environment related to DFS, and (3) general accessibility of financial services (e.g., availability of bank
branches and ATMs).
4. Descriptive analysis
Table 1 presents an overview of the country-level characteristics for fintech and financial infrastructure, technology access, and
regulatory environment for the 16 emerging economies listed by region. With regards to our key macro variable of interest, we observe
that the geometric GFI score varies widely across countries. The 16 emerging economies had an average geometric GFI score of 12.5. Of
all the countries, India had the highest score (25.7), followed by China (21.8) and Brazil (21.5). These three countries are among the
largest emerging economies – often referred to as the BRICS, along with Russia and South Africa. From here, the scores fall off a bit,
with Mexico falling into fourth place (13.9), and then South Korea (13.8) and Russia (12.6). Among the 16 countries studied, Turkey
(8.3), Chile (8.2), Indonesia (7.5), and Nigeria (5.1) had the lowest scores for their fintech ecosystems.
In Table 1, it is interesting to note that having a more developed fintech ecosystem (as reflected by higher GFI scores) does not
necessarily correlate with stronger infrastructure when it comes to information and communications technologies, regulatory con
ditions, and access to traditional financial services. In fact, as Table 1 shows, there are several countries with lower GFI scores than
India, China, and Brazil that appear to have better infrastructure when it comes to internet and mobile phone accessibility and usage.
See, for example, South Korea and the UAE. Colombia, with only a GFI score of 9.6, had one of the better regulatory environments for
facilitating mobile money and general financial inclusion. Poland and Russia reported some of the highest levels of bank branch
penetration, along with South Korea which reported the highest levels of ATM availability. However, using a limited set of unidi
mensional metrics to make cross-country comparisons makes it difficult to understand a country’s full and more holistic potential when
it comes to the future impacts that fintech may have on the financial services industry. For this reason, we focused our attention on the
newly developed and more comprehensive, multidimensional GFI score.
Tables 2-4 present a descriptive profile of respondents who are living in emerging economies according to their demand for
financial services and usage of digital technologies and DFS. Table 2 focuses on the measures of financial inclusion by country, where
the countries are presented in ranked order from highest to lowest based on their geometric GFI score. On average, 71.1% of re
spondents reported having a formal financial account, while only 5.6% had a mobile money account (MMA). Only 47.3% had saved in
the past 12 months and only 48.1% reported that they would be able to come up with an emergency fund if needed. In terms of
borrowing, 46.7% borrowed in the past 12 months, with the primary source being informal borrowing from family and friends. With
regards to remittances, 16.8% had sent funds while 18.0% had received funds. Of those who sent or received funds, at least half used a
formal financial institution as the delivery channel. A considerable percentage reported using their mobile phones (27.8% to send
money and 23.6% to receive money).
In terms of cross-country comparisons, South Korea had the highest rate of financial inclusion – 94.9% of the adult population
reported having an account at a financial institution, 68.9% had saved, and 72.8% had borrowed in the past 12 months. By far, South
Korea also had the highest proportion of adults who reported being able to come up with an emergency fund (79.0%). The other Asian
countries (e.g., China, Indonesia, and Malaysia) also tended to report higher propensities to save and to prepare financially for an
emergency. This is perhaps not surprising since the Asian countries have historically had higher rates of savings. With regards to Latin
America, only 35.9% of respondents in Mexico reported having a financial account – the lowest of all the emerging economies. Re
spondents in Colombia and Argentina also reported lower account participation compared to the other countries (45.2% and 47.8%,
respectively). Among Latin American respondents, the most common reason for not having an account was related to the cost of a
financial account – either the accounts were too expensive or the respondent lacked the funds necessary to open an account. Inter
estingly, Chilean respondents were about four times more likely than respondents from the other Latin American countries to have an
MMA (18.7%). Latin American respondents also tended to be less likely to have an emergency fund, to borrow and were considerably
less likely to send or receive remittances, especially via a mobile phone. However, if they were sending or receiving remittances, cash
and financial institutions were the preferred delivery channels. Not surprisingly, those emerging countries with more developed digital
payment systems (China, South Africa, and Malaysia) were more likely to send and receive remittances using a financial institution or a
mobile device.
Among the economies that had higher levels of fintech development, countries such as Brazil and India reported fairly high levels of
financial inclusion in terms of account ownership (70.4% and 80.0%, respectively). However, they were among the lowest countries in
terms of savings rates (32.8% and 33.6%, respectively). Argentinians were the least likely to have saved (only 30.3%). These findings
suggest that additional access to financial services may not directly translate into usage, even in countries with strong fintech eco
systems. An additional observation was that informal markets continue to play a key role in terms of savings and borrowing, especially
in emerging economies in Africa and Asia. For example, South Africa and Indonesia reported the highest rates of informal savings
7
Table 1
Country-level profile of fintech ecosystems of emerging economies.
A.C. Lyons et al.

Variables Emerging Latin America Asia Africa Europe Middle East
Economies
Argentina Brazil Chile Colombia Mexico China India Indonesia Malaysia South Nigeria South Poland Russia Turkey UAE
Korea Africa
Fintech infrastructure
GFI – Geometric 12.5 10.2 21.5 8.2 9.6 13.9 21.8 25.7 7.5 9.1 13.8 5.1 10.1 10.0 12.6 8.3 12.4
Score
GFI Quantity 3.5 1.5 6.7 1.1 1.9 2.5 10.7 15.4 1.0 1.4 1.5 1.0 2.1 1.7 3.1 1.4 3.4
GFI Quality 9.7 10.5 19.3 6.0 6.6 14.1 13.1 14.5 6.7 7.0 20.4 2.4 6.5 6.6 8.3 6.2 7.5
GFI Environment 74.2 67.9 76.9 80.0 70.7 74.4 73.3 76.0 62.6 77.3 86.6 57.4 75.3 87.5 77.6 66.7 76.5
GFI – Normalized 21.8 19.7 27.0 20.8 19.2 22.8 25.9 29.0 16.9 20.7 27.3 14.3 20.4 23.1 21.9 17.9 21.5
Score
GFI – Raw Scorea 10.0 9.4 11.5 9.7 9.3 10.3 11.1 12.0 8.7 9.7 11.5 7.9 9.6 10.4 10.1 8.9 9.9
Information and communications technology infrastructure

Mobile phone 126.9 140.9 105.0 124.6 127.2 91.6 103.4 87.3 164.4 136.1 124.6 75.9 155.2 133.0 156.2 95.9 209.0
subscriptions (per
100 people)b
Fixed broadband 15.2 17.9 13.9 16.6 12.9 13.6 27.7 1.3 2.3 8.6 41.5 0.1 2.0 20.1 21.4 14.7 29.1
subscriptions (per
b
100 people)
Internet users (% of 66.0 74.3 67.5 82.3 62.3 63.9 54.3 34.5 32.3 80.1 95.1 42.0 56.2 76.0 76.0 64.7 94.8
population)b
Inclusive Internet 74.5 73.8 75.9 81.7 72.0 70.3 75.1 71.7 66.4 75.4 84.0 61.2 76.2 82.3 79.0 71.7 74.9
Index scorec
Mobile Connectivity 67.2 67.3 64.8 72.8 64.8 67.9 74.0 53.7 61.1 68.0 83.4 45.9 59.9 75.6 73.0 68.2 74.3
Indexd
8
Regulatory environment
Mobile Money 82.2 78.4 88.0 –.- 90.3 73.4 –.- 83.8 80.2 87.3 –.- 80.7 78.0 –.- 82.2 –.- –.-
Regulatory
e
Index
Enabling 63.8 64.0 64.0 66.0 81.0 70.0 61.0 72.0 69.0 –.- –.- 56.0 62.0 –.- 52.0 48.0 –.-
environment for
financial
inclusion indexf
Financial infrastructure
Commercial bank 15.3 13.5 19.5 14.8 15.4 14.7 8.8 14.5 16.8 10.2 15.4 4.4 10.4 29.3 29.2 17.3 11.3
branches per
100,000 adultsg

Commercial bank 15.2 1.6 3.8 2.9 5.2 6.9 10.7 47.4 17.9 7.3 70.6 5.2 3.5 30.9 2.1 13.7 12.9
branches per
1000 km2 g
ATMs per 100,000 78.4 53.1 107.9 51.6 42.0 55.6 84.4 22.0 55.1 47.5 272.0 16.3 67.8 71.9 164.0 77.8 65.4
adultsg
2 g
ATMs per 1000 km 116.1 6.4 21.0 10.3 14.2 26.1 102.3 71.8 58.9 34.1 1246.2 19.2 22.6 75.9 11.9 61.5 74.7
a
Findexable Limited (2019) - The Global Fintech Index 2020.
b
International Telecommunication Union (ITU) (2018) - ICT Indicators database.
c
The Economist Intelligence Unit (2020) - Inclusive Internet Index 2020.
d
GSMA (2018) - Global Mobile Connectivity Index 2019.
e
GSMA (2020) - Mobile Money Regulatory Index.
f
The Economist Intelligence Unit (2019) – 2019 Global Microscope.
g
IMF (2017) - Financial Access Survey (FAS).
A.C. Lyons et al.
Table 2
Financial inclusion profile of households in emerging economies (respondent-level characteristics).
Percentages Emerging Global Fintech Index (GFI) Rankings based on Geometric GFI Score (from highest to lowest)
Economies
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
N = 21,121
India China Brazil Mexico South Korea Russia UAE Argentina South Africa Poland Colombia Malaysia Turkey Chile Indonesia Nigeria
n = 2932 n = 3524 n = 986 n = 980 n = 992 n = 1946 n = 985 n = 991 n = 952 n = 941 n = 994 n = 909 n = 986 n = 1035 n = 992 n = 976
Has account 71.4 80.1 -.- 70.4 37.4 -.- -.- 88.3 48.6 70.6 -.- 46.0 87.1 68.8 74.5 49.0 40.7
Has financial account 71.1 80.0 80.7 70.4 35.9 94.9 75.8 87.4 47.8 68.7 86.4 45.2 87.0 67.9 74.0 48.5 40.5
Has mobile money account 5.6 2.0 -.- 4.9 5.5 -.- -.- 21.5 2.4 20.1 -.- 4.8 11.1 16.5 18.7 3.1 5.8
Reasons for no account
Too far away 21.1 23.4 18.9 31.9 29.8 0.0 13.2 14.8 10.7 27.7 12.1 20.7 36.3 10.3 18.2 32.2 19.0
Too expensive 34.1 26.8 13.1 52.3 51.7 2.6 32.5 29.1 41.4 37.9 27.2 58.8 46.8 13.9 54.8 31.5 14.1
Lack of docu 21.5 21.1 9.4 17.7 27.7 16.6 13.9 26.9 29.9 22.1 24.9 29.5 29.3 10.0 24.8 27.0 18.9
mentation
Lack of trust 21.3 21.4 6.9 26.4 36.1 1.9 33.6 7.1 26.7 23.6 19.3 27.7 23.7 20.8 41.3 7.9 5.0
Religious reasons 5.1 6.0 2.0 5.4 6.1 0.0 3.7 6.3 2.8 7.3 2.9 6.1 10.9 15.8 4.8 4.2 2.6
Lack of money 58.8 56.0 63.7 56.8 58.1 42.9 50.3 48.5 58.7 59.4 48.3 66.4 52.9 32.7 58.1 71.8 66.6
Family member has one 32.3 51.9 28.6 51.8 22.6 46.2 28.6 57.4 22.8 31.7 43.0 20.4 62.8 66.5 21.8 27.9 15.8
No need for fin services 34.7 31.1 24.1 37.2 35.4 53.8 55.7 40.6 38.6 39.4 57.1 34.6 62.4 47.0 40.0 25.3 11.9
Saved in past 12 months 47.3 33.6 51.6 32.8 40.8 68.9 36.7 56.7 30.3 61.2 51.8 38.8 68.6 39.0 49.3 62.0 63.0
Formal savings 24.1 19.9 35.3 14.7 9.7 55.4 13.9 28.8 7.2 22.5 33.8 8.8 41.1 22.9 21.2 21.7 21.1
Informal savings 8.7 8.4 4.3 4.1 12.6 –.- 1.8 –.- 3.2 30.5 3.5 5.1 11.3 11.0 7.8 30.1 25.6
Saving for retirement 18.7 11.2 21.6 11.0 13.5 41.8 14.5 23.8 6.7 10.5 20.5 12.8 45.7 20.2 17.7 27.6 13.0
9
Has emergency fund 48.1 45.6 58.4 45.9 26.8 79.0 56.1 52.3 34.3 29.0 34.4 36.8 40.8 64.3 42.8 46.5 45.3
Source: Savings 29.4 23.1 39.0 14.4 18.7 50.4 17.8 27.0 18.6 29.9 63.8 15.8 45.1 19.3 26.4 19.1 29.8
Source: Family or friends 31.9 47.6 13.1 41.5 28.2 28.1 46.6 24.8 31.9 30.5 14.8 27.4 23.2 59.2 30.8 27.8 34.7
Source: Other 37.9 29.1 47.2 44.1 52.7 20.8 33.7 46.9 49.0 39.6 19.5 55.1 31.0 21.2 42.7 51.8 35.4
Borrowed in past 12 months 46.7 42.3 44.9 40.0 31.4 72.8 42.0 63.8 37.5 54.7 51.7 41.2 41.7 59.2 45.4 55.1 40.1
Formal borrowing 11.4 6.4 8.7 8.8 5.9 17.7 14.2 19.1 7.4 9.8 23.7 14.4 12.8 13.8 13.4 17. 4.1
Informal borrowing 26.2 34.2 28.6 13.6 17.6 12.0 23.1 25.8 15.7 42.3 26.3 21.0 17.7 30.8 17.5 43.6 31.2
Sent remittances 16.8 11.3 18.3 9.3 9.2 –.- 27.2 –.- 5.7 30.3 16.8 20.4 28.0 21.4 18.8 17.9 33.1
Sent: Fin institution 60.4 57.3 61.6 55.9 67.5 –.- 54.4 –.- 35.8 61.9 77.6 42.3 77.4 60.3 64.7 60.5 61.6
Sent: Mobile phone 27.8 7.4 59.2 3.7 11.5 –.- 39.6 –.- 1.0 33.6 7.5 5.8 28.2 21.5 22.7 11.5 16.2
Sent: In cash 20.8 25.8 17.7 20.8 14.5 –.- 14.4 –.- 45.2 23.2 13.0 22.3 11.0 27.6 21.4 28.8 28.8
Sent: MTO 6.9 1.7 2.6 3.4 10.5 –.- 6.0 –.- 8.6 13.3 5.9 34.1 5.4 5.4 7.8 6.0 1.8
Received remittances 18.0 15.8 18.7 8.3 11.1 –.- 21.6 –.- 7.6 39.2 18.2 20.7 25.8 19.9 16.6 24.8 40.8
Received: Fin institution 50.5 32.0 53.6 60.3 52.5 –.- 47.9 –.- 22.5 55.8 70.9 41.5 69.3 44.5 58.3 46.5 55.1

Received: Mobile phone 23.6 2.1 56.4 6.4 14.2 –.- 37.1 –.- 6.6 39.2 4.7 6.7 20.2 18.7 12.9 6.1 11.3
Received: In cash 29.8 53.8 19.7 31.6 22.3 –.- 15.3 –.- 58.8 27.9 20.5 27.1 14.8 38.0 26.3 35.8 40.1
Received: MTO 7.8 2.3 3.2 3.2 9.2 –.- 5.0 –.- 15.8 16.4 4.7 29.3 6.3 11.3 11.8 9.3 1.8
Demographics
Age (years) 39.5 36.5 40.5 39.3 38.9 43.9 44.1 35.4 41.4 36.4 45.1 39.6 37.0 39.3 43.4 37.2 33.3
Age < 25 21.0 27.7 13.2 23.0 25.2 17.0 16.9 8.4 23.0 28.8 14.1 24.3 27.8 20.6 18.3 23.4 35.6
Female 49.7 49.0 49.0 52.7 53.2 50.2 54.8 27.2 52.0 51.4 52.4 52.9 46.1 50.3 52.4 51.2 49.5
Educ: Primary or less 35.7 52.5 61.6 33.7 35.4 14.5 16.5 3.4 38.7 24.9 13.8 36.7 4.4 33.0 24.3 47.5 43.1
Educ: Secondary 50.8 43.0 33.1 60.1 49.0 50.3 58.2 37.4 55.8 70.2 67.2 52.7 73.7 57.3 59.9 48.2 55.5
(continued on next page)
A.C. Lyons et al.
Table 2 (continued )
Percentages Emerging Global Fintech Index (GFI) Rankings based on Geometric GFI Score (from highest to lowest)
Economies
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
N = 21,121
Educ: Tertiary 13.5 4.5 5.3 6.2 15.6 35.2 25.3 59.3 5.5 4.8 19.0 10.6 21.9 9.7 15.8 4.3 1.3
Paid employment 37.7 20.6 35.0 33.5 28.1 52.1 51.5 72.9 33.5 33.2 56.3 30.2 42.5 39.0 43.8 36.5 19.3
Works in public sector 6.1 1.8 3.7 7.4 4.2 6.7 12.0 14.5 7.4 7.7 4.6 5.3 10.1 5.1 7.4 5.4 5.7
Works in private sector 31.5 18.8 31.2 26.1 23.9 45.4 39.6 58.4 26.1 25.5 51.7 24.9 32.4 33.9 36.4 31.1 13.6
10
Received govt transfer 15.4 8.2 12.3 14.8 12.5 27.4 23.3 4.4 14.8 26.6 18.9 13.1 29.3 10.7 22.4 16.5 2.8
Note: All summary statistics are weighted. Information on mobile money account ownership was not collected for China, Poland, Russia, and South Korea. Similarly, data on informal savings and re
mittances were not collected for South Korea and UAE. Responses to “Reasons for no account” were conditional on not having a formal financial account. The sources of respondents’ emergency funds
were conditional on having an emergency fund. The channels respondents used to send and receive remittances were conditional on having sent or received remittances. Source: World Bank Global Findex
Data (2017).

A.C. Lyons et al.
Table 3
Digital finance profile of households in emerging economies according to fintech ranking.
Variables Emerging Global Fintech Index (GFI) Rankings based on Geometric GFI Score (from highest to lowest)
Economies
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
N = 21,121
GFI indicators (country-level data)

GFI – Geometric Score 12.5 25.7 21.8 21.5 13.9 13.8 12.6 12.4 10.2 10.1 10.0 9.6 9.1 8.3 8.2 7.5 5.1
GFI Quantity 3.5 15.4 10.7 6.7 2.5 1.5 3.1 3.4 1.5 2.1 1.7 1.9 1.4 1.4 1.1 1.0 1.0
GFI Quality 9.7 14.5 13.1 19.3 14.1 20.4 8.3 7.5 10.5 6.5 6.6 6.6 7.0 6.2 6.0 6.7 2.4
GFI Environment 74.2 76.0 73.3 76.9 74.4 86.6 77.6 76.5 67.9 75.3 87.5 70.7 77.3 66.7 80.0 62.6 57.4
GFI – Normalized Score 21.8 29.0 25.9 27.0 22.8 27.3 21.9 21.5 19.7 20.4 23.1 19.2 20.7 17.9 20.8 16.9 14.3
11
GFI – Raw Score 10.0 12.0 11.1 11.5 10.3 11.5 10.1 9.9 9.4 9.6 10.4 9.3 9.7 8.9 9.7 8.7 7.9
Usage of digital financial services (DFS) (respondent-level data)

Has mobile phone 85.2 68.9 94.0 85.5 64.8 97.0 64.8 100.0 85.5 79.3 89.4 83.6 87.8 92.6 90.2 77.1 71.7
Used phone or internet to access fin 24.2 5.0 39.6 12.8 5.0 67.2 29.4 44.2 9.1 17.0 51.6 6.8 32.1 24.0 24.9 6.6 7.1
account
Paid bills or bought something online 30.8 4.3 49.1 17.9 13.1 76.1 39.8 59.8 18.6 14.3 63.4 11.7 40.0 36.1 29.5 11.2 6.5
Made bill payments online 24.1 2.7 39.8 11.4 9.2 64.3 34.8 44.6 12.6 10.4 49.6 8.0 24.9 32.7 23.7 4.2 4.1
Bought something online 25.0 2.9 45.6 14.4 6.8 72.6 26.9 49.8 14.4 8.0 46.8 8.5 35.4 21.1 23.0 9.9 4.2
Used phone to check account balances 27.3 6.7 38.8 17.5 6.3 63.9 37.6 52.2 9.8 24.5 56.7 12.4 35.0 25.8 34.6 6.4 11.2
Used phone to pay utility bill 8.1 1.3 17.1 4.0 2.7 10.0 10.1 17.5 2.9 6.5 9.0 2.1 10.7 10.4 8.7 3.2 1.3
Used phone to receive wage payments 4.1 0.5 11.7 0.2 0.5 1.9 2.5 10.5 0.3 10.2 1.6 0.7 4.5 5.6 1.6 0.5 2.4
Note: Summary statistics are weighted. The country-level data in the top panel were taken from the Findexable’s Global Fintech Index (2019). The respondent-level data in the bottom panel were taken
from the World Bank Global Findex Database (2017).

A.C. Lyons et al.
Table 4
Digital finance profile of economically vulnerable populations in emerging economies.
Percentages Emerging economies Youth (age 15–24) Middle (Age 25–54) Aging (Age ≥ 55) Female Male Less educated Better educated Poorest 20% Richest 80%
N = 21,121 n = 3594 n = 12,008 n = 5519 n = 11,387 n = 9734 n = 7649 n = 13,472 n = 3934 n = 17,187
Financial inclusion measures

Has bank account 71.1 60.1 76.2 67.5 67.4 74.7 58.9 77.8 61.1 73.5
Saved in past 12 months 47.3 47.3 50.8 37.1 43.4 51.1 34.4 54.4 32.2 51.0
Has emergency fund 48.1 44.2 52.6 39.4 43.0 53.2 36.9 54.4 27.2 53.4
Borrowed in past 12 months 46.7 40.1 52.6 36.3 43.5 49.8 38.7 51.1 43.6 47.4
Sent remittances 16.8 17.8 18.3 11.5 14.9 18.7 11.4 19.8 10.4 18.4
Received remittances 18.0 24.5 17.6 12.6 17.3 18.6 15.2 19.5 14.8 18.8
Digital financial inclusion measures

Has mobile money account 8.6 8.3 10.6 2.7 6.8 10.3 2.2 12.0 4.9 9.5
Sent remittances via mobile phonea 27.8 35.7 28.6 11.4 27.8 27.8 20.6 30.0 25.1 28.1
12
Received remittances via mobile phonea 23.6 27.2 26.2 6.3 22.1 25.0 18.0 26.1 19.8 24.4
Usage of digital financial services (DFS)

Has mobile phone 85.2 83.4 89.5 74.7 82.7 87.6 75.2 90.7 79.5 86.6
Used phone or internet to access fin account 24.2 22.3 30.2 9.2 22.2 26.2 9.6 32.3 13.4 27.0
Paid bills or bought something online 30.8 33.4 36.8 11.2 28.6 33.1 13.0 40.7 18.6 33.9
Made bill payments online 24.1 20.9 30.4 9.3 22.3 25.9 9.3 32.3 13.4 26.8
Bought something online 25.0 28.9 29.9 7.1 23.2 26.9 10.3 33.2 14.6 27.7
Used phone to check account balances 27.3 24.2 33.9 11.6 24.4 30.2 10.0 36.9 16.7 30.0
Used phone to pay utility bill 8.1 5.5 11.0 2.3 7.0 9.1 3.6 10.6 3.7 9.2
Used phone to receive wage payments 4.1 3.3 5.5 1.1 3.4 4.8 2.0 5.3 1.9 4.7
Note: All summary statistics are weighted. Source: World Bank Global Findex Database (2017).
a
These statistics were conditional on having sent or received remittances.

(approximately 30.0% for each country). Indonesia, South Africa, India, Nigeria, Turkey, and China had the highest rates of informal
borrowing, ranging from 43.6% for Indonesia to 28.6% for China.
Table 3 takes a closer look at the relationship between the fintech indicators and usage of DFS. The emerging economies are again
ranked according to their geometric GFI score. A noteworthy observation is that some of the largest emerging economies with the
highest GFI scores had some of the lowest percentages of individuals who were using DFS. For example, respondents in India and
Mexico were among some of the least likely to own a mobile phone. They were, in turn, the least likely to use their phones or the
internet to access their financial accounts. They were also the least likely to pay bills or make purchases online and to use their mobile
phones to pay utility bills or receive wage payments. Although the percentages were somewhat higher, Brazil also reported low levels
of DFS usage. Countries with high GFI rankings that also reported high levels of DFS usage are South Korea, Poland, and UAE, followed
by China. By far, respondents in South Korea were the most likely to use DFS for all of the reported categories, except when it came to
mobile phone usage to pay utility bills or receive wage payments. Respondents living in China and UAE were more likely than those
living in South Korea to digitally pay bills and receive wage payments. Across all of the emerging economies, it is not surprising that
using the internet to pay bills or make online purchases was reported as the most frequent usage of DFS, along with using the internet
and mobile phone to access financial accounts and check account balances. Overall, these results provide additional evidence that,
while more developed fintech ecosystems may translate into greater accessibility of DFS, they may not directly translate into greater
usage of those services.
In Table 4, the measures for financial inclusion and usage of DFS are presented to compare vulnerable populations in emerging
economies with those who are less vulnerable, especially to digital transformations. Not surprisingly, those who were younger, older,
female, less educated, and among the poorest were less likely to be financially included than their counterparts. Across all the financial
inclusion measures, they were less likely to have accounts, to be saving, to be able to come up with emergency funds, and to be
borrowing. Younger respondents were more likely to be sending or receiving remittances than older respondents. Table 4 also reveals
that the aging, the poorest, and the less educated are even more disadvantaged when it comes to digital financial usage. They were
significantly less likely than their counterparts to use mobile phones and the internet to conduct basic financial transactions. The
gender gap in DFS usage, while still present, was considerably smaller.
5. Empirical methodology
To empirically investigate the relationship between fintech development and financial inclusion outcomes, we first estimate a
series of probit models related to respondents’ savings, borrowing, and remittance behaviors. The decision to open a financial account
serves as the baseline model:
FinAcctij * = α1 GFIScorej + VulnerableGroupij ’β1 + Xij ’γ 1 + εij ,

{ } { } (3)
where FinAcctij = 1 iff FinAcctij * > 0 and 0 otherwise for i = 1, …, I and j = 1, …, J .
In this model, FinAcctij* is the continuous, latent random variable that represents the actual deposit/balance in the account at a formal
financial institution by the ith respondent in the jth country. FinAcctij* is unobservable in the data. However, the discrete dependent
variable, FinAcctij, is observable such that it is equal to one if the ith respondent in the jth country reported having an account at a bank
or other formal financial institution and zero otherwise. The error terms, εij, are assumed to be distributed standard normally with
mean zero and variance equal to one. The factors that determine FinAcctij*, and thus FinAcctij, include our key independent variable,
GFIScoreij, which is set equal to the geometric GFI score for the jth country.10 The factors determining FinAcctij are represented by a
vector, VulnerableGroupij, that includes a set of controls for those groups likely to be the most economically vulnerable: (1) youth (age
15–24), (2) aging (age ≥ 55), (3) females, (4) those with primary education or less, and (5) the poorest 20%. In more general terms, this
vector controls for age groups, gender, education, and income levels. An additional vector, Xij, includes other respondent-level control
variables related to employment status, government transfers, and individuals’ usage of digital technologies to conduct basic financial
transactions.
Similar probit models are constructed for the other financial behaviors related to savings, borrowing, and remittances. For each
behavior, the models are weighted and estimated for the pooled observations from all 16 emerging economies, with each model
controlling for the country-fixed effects related to each country’s fintech ecosystem using the geometric GFI score.
To test the robustness of our findings to various configurations of the GFI score, we re-estimate the models using each country’s
normalized GFI score. The normalized score represents the overall raw score rescaled from 0 to 100 using the min-max method from
Eq. (1). The normalized score does not standardize the three dimensions individually, nor does it apply the geometric mean approach
outlined in Eq. (2), which assigns equal weights to each dimension. It simply normalizes the raw GFI score. As a third check, the models
are estimated using the raw GFI score originally released by Findexable Limited, which sums the three-dimensional scores to obtain a
total score.
Recall that the descriptive findings identified that a country’s fintech ecosystem is likely to be a contributing factor to heteroge
neities across regions and vulnerable populations in terms of financial inclusion and usage of DFS. As a check, we test our results by
10
Note that the GFI score is defined at the country level and so has the same value for all individuals living in that particular country. As such, this
variable serves as a country-fixed effect that captures the state of development of a country’s fintech ecosystem. However, instead of being a dummy
indicator (0/1), it is an actual standardized value that was calculated using a standardized geometric mean approach.
13
first estimating the models again by region using the geometric GFI scores to assess if and how fintech ecosystems may be influencing
respondents’ financial decisions in various areas of the world, especially countries in Latin America compared to Asia. We then follow a
methodological approach similar to that of Lyons and Kass-Hanna, 2021b, Allen et al. (2016), Özşuca (2019), and Stampini et al.
(2016), which use interaction terms, to identify heterogeneities and inequalities across vulnerable populations. To isolate the “fintech
effect” for the different marginalized populations, we estimate our probit models for each measure of financial inclusion including the
same control variables in Eq. (3) plus an interaction term (VulnerableGroupij*GFIScorej). More specifically, the country-specific GFI
scores are interacted with dummies for the vulnerable population groups – either youth (age 15–24), aging (age ≥ 55), females, the less
educated, or the poorest 20%. The interaction terms are then used to calculate the specific sensitivity of each vulnerable group’s
financial inclusiveness to changes in their country’s fintech ecosystem.
6. Results
6.1. Results for baseline models using geometric GFI score
Table 5 presents our baseline probit results for respondents’ savings and borrowing decisions using the geometric GFI score. The
findings show that respondents living in countries with more developed fintech ecosystems are significantly more likely to have a
financial account but less likely to have a mobile money account (MMA). Specifically, a one-unit increase in the GFI score is associated
with a 2.3% increase in the likelihood of having a formal financial account (1.60/71.1%) and a 3.4% decrease in having an MMA
(0.19/5.6%). Because MMA data were not collected for China, South Korea, Russia, and Poland, one must be somewhat cautious when
interpreting the MMA results and making comparisons to traditional financial accounts. Among the emerging economies, China and
South Korea have highly developed infrastructure and high usage rates when it comes to DFS. Those trends are not reflected in the
estimations for the MMA model.
Table 5 also indicates that there is a significant and negative relationship for savings, implying that more developed fintech
ecosystems are not necessarily associated with increases in individuals’ savings behaviors. A closer look at the results for the savings
channels shows that respondents living in countries with higher GFI scores appear to be significantly more likely to save using a bank or
other formal financial institution, but less likely to save via an informal savings group/club or a person outside of the family. More
precisely, a one-unit increase in the GFI score is associated with a 2.0% increase in formal savings (0.47/24.1%) and a 6.2% decrease in
informal savings (0.54/8.7%). Despite a negative correlation between the GFI score and savings behavior in general, a significanlty
positive relationship is observed between fintech development and individuals’ ability to procure funds in case of an emergency. With
regards to borrowing decisions, fintech development tends to be negatively correlated with borrowing in general, and specifically with
formal borrowing, but positively associated with informal borrowing. These findings suggest that fintech development may result in
greater access to accounts, but not necessarily increases in all types of savings and borrowing. Other barriers to financial inclusion still
exist that can impact an individual’s ability to save and access capital, and many of these barriers are unrelated to fintech (e.g.,
regulatory, legal, and cultural barriers).
By and large, Table 5 also shows that those who make payments or purchases online and those who use a mobile phone to pay
utility bills or receive wage payments are significantly more likely to be financially included. The findings are consistently positive and
significant for almost all of the account ownership and savings behaviors. They are also positive and mostly significant for borrowing,
especially formal borrowing. These findings suggest that having access to online and mobile financial services is related to greater
financial inclusion. The results for the sociodemographics provide some insights into potential gaps in financial inclusion, especially
for those populations most likely to be vulnerable. With respect to age, younger respondents are significantly less likely to have a
financial account but more likely to have an MMA. They are also more likely to have saved or borrowed informally in the past 12
months, but less likely to have saved or borrowed formally. Not surprisingly, there appears to be a gender gap for financial inclusion, as
women are significantly less likely to have accounts, to be saving and securing emergency funds, and to be borrowing. There is some
evidence to suggest, however, that they may be trying to find ways to save informally. In addition to these findings, there are education
and income gaps, as those with less education and lower incomes are also significantly less likely to be financially included when it
comes to formal financial services. Those with lower incomes may be relying on family, relatives, or friends or an informal savings
group/club to borrow, and those with less education may be relying on informal means to both save and borrow.
Table 6 presents the findings for the baseline probits related to the sending and receiving of domestic remittances. The results show
that more developed fintech ecosystems are associated with fewer transfers in general. However, conditional on using remittances, we
find a positive and significant relationship between fintech development and the sending and receiving of remittances via a mobile
phone. Specifically, a one-unit increase in the geometric GFI score is associated with a 2.3% and 1.5% increase in the sending (0.63/
27.8%) and receiving (0.35/23.6%) of remittances via a mobile phone, respectively. We also find that respondents’ usage of DFS to pay
bills, make online purchases, and receive wage payments is significantly associated with the likelihood of remittances via both
financial institutions and mobile phones, but more so for mobile phones. It is important to emphasize that these relationships reflect
positive correlations and not necessarily causation. It is likely that some respondents’ first encounter with DFS was via sending or
receiving remittances, which then could have resulted in respondents using the internet or mobile phone to conduct additional
financial transactions and engage in other financial behaviors. Similarly, the relationship could have been in the other direction – as is
assumed and reflected by the current baseline models.
With regards to demographics, younger respondents are more likely to send and receive remittances and to do so using their mobile
phones. Those with less education are less likely to be sending remittances, but more likely to be receiving them. Those with lower
incomes are less likely to be both sending and receiving remittances, especially via a formal financial institution. This is not surprising
14
Table 5
Probit results for households’ savings and borrowing decisions for emerging economies (marginal effects).
A.C. Lyons et al.

Variables Account Ownership Savings Decisions Borrowing Decisions
Has financial Has mobile money Saved in past 12 Formal Informal Able to come up w/ Borrowed in past Formal Informal
account account months savings savings emergency funds 12 months borrowing borrowing
GFI – Geometric Score 0.0160*** ¡0.0019*** ¡0.0062*** 0.0047*** ¡0.0054*** 0.0072*** ¡0.0013* ¡0.0026*** 0.0013**
(0.0006) (0.0003) (0.0007) (0.0006) (0.0004) (0.0007) (0.0007) (0.0004) (0.0006)
Age: 15–24 − 0.2177*** 0.0196** 0.0350** − 0.0829*** 0.0457*** − 0.0328** − 0.0214 − 0.0546*** 0.1376***
(0.0140) (0.0091) (0.0140) (0.0099) (0.0101) (0.0142) (0.0138) (0.0065) (0.0137)
Age: 25–34 − 0.0778*** 0.0281*** 0.0628*** − 0.0368*** 0.0731*** 0.0010 0.0672*** − 0.0024 0.1570***
(0.0120) (0.0096) (0.0133) (0.0102) (0.0106) (0.0136) (0.0131) (0.0075) (0.0131)
Age: 35–44 − 0.0460*** 0.0184* 0.0452*** − 0.0209* 0.0568*** 0.0326** 0.0974*** 0.0143* 0.1276***
(0.0118) (0.0096) (0.0137) (0.0107) (0.0107) (0.0138) (0.0133) (0.0081) (0.0134)
Age: 45–54 − 0.0404*** 0.0069 0.0342** − 0.0228** 0.0459*** 0.0249* 0.0848*** 0.0131 0.0961***
(0.0121) (0.0095) (0.0141) (0.0110) (0.0111) (0.0140) (0.0136) (0.0085) (0.0135)
Female − 0.0343*** − 0.0049 − 0.0485*** − 0.0277*** 0.0116** − 0.0657*** − 0.0402*** − 0.0233*** − 0.0187**
(0.0072) (0.0037) (0.0087) (0.0071) (0.0049) (0.0088) (0.0086) (0.0049) (0.0074)
Education: Primary or less − 0.2188*** − 0.0152** − 0.0757*** − 0.0842*** 0.0367*** − 0.1280*** − 0.0400*** − 0.0260*** 0.1240***
(0.0175) (0.0059) (0.0155) (0.0110) (0.0106) (0.0155) (0.0153) (0.0079) (0.0144)
Education: Secondary − 0.0779*** − 0.0031 − 0.0212 − 0.0377*** 0.0322*** − 0.0748*** − 0.0152 − 0.0066 0.0719***
(0.0146) (0.0047) (0.0134) (0.0097) (0.0087) (0.0135) (0.0132) (0.0065) (0.0115)
Household income per − 0.1016*** − 0.0087* − 0.2116*** − 0.1418*** − 0.0586*** − 0.3110*** − 0.0054 − 0.0117 0.0613***
capita: Bottom 20% (0.0135) (0.0053) (0.0128) (0.0083) (0.0055) (0.0118) (0.0139) (0.0075) (0.0127)
Household income per − 0.0929*** − 0.0113** − 0.1392*** − 0.0999*** − 0.0443*** − 0.2182*** − 0.0351*** − 0.0072 0.0221*
capita: Second 20% (0.0134) (0.0047) (0.0131) (0.0089) (0.0058) (0.0126) (0.0135) (0.0072) (0.0121)
Household income per − 0.0503*** − 0.0089* − 0.1121*** − 0.0680*** − 0.0386*** − 0.1533*** − 0.0274** − 0.0023 0.0266**
capita: Third 20% (0.0125) (0.0046) (0.0129) (0.0091) (0.0059) (0.0128) (0.0133) (0.0071) (0.0119)
15
Household income per − 0.0389*** 0.0010 − 0.0428*** − 0.0298*** − 0.0284*** − 0.0625*** − 0.0226* 0.0015 0.0172
capita: Fourth 20% (0.0125) (0.0050) (0.0130) (0.0094) (0.0061) (0.0130) (0.0130) (0.0071) (0.0116)
Paid employment 0.1026*** 0.0338*** 0.0520*** 0.0582*** 0.0046 0.0613*** 0.1068*** 0.0333*** 0.0502***
(0.0083) (0.0053) (0.0103) (0.0085) (0.0062) (0.0105) (0.0102) (0.0061) (0.0090)
Works in public sector 0.1576*** 0.0330*** 0.0333* 0.0141 0.0221* 0.0444** 0.0211 0.0348*** 0.0316**
(0.0116) (0.0095) (0.0188) (0.0144) (0.0114) (0.0189) (0.0185) (0.0106) (0.0160)
Received government 0.1661*** 0.0321*** 0.0871*** 0.0591*** 0.0305*** − 0.0104 0.1009*** 0.0408*** 0.0741***
transfer (0.0069) (0.0072) (0.0118) (0.0103) (0.0074) (0.0119) (0.0116) (0.0074) (0.0106)
Has mobile phone 0.1426*** 0.0102* 0.0856*** 0.0975*** − 0.0085 0.1517*** 0.0846*** 0.0460*** 0.0374***
(0.0116) (0.0060) (0.0128) (0.0097) (0.0075) (0.0129) (0.0125) (0.0066) (0.0105)
Made payments or bought 0.2222*** 0.1494*** 0.1769*** 0.1862*** − 0.0207*** 0.1590*** 0.1680*** 0.0702*** 0.0084
something online (0.0077) (0.0117) (0.0109) (0.0099) (0.0060) (0.0111) (0.0109) (0.0071) (0.0096)
Used mobile phone to pay 0.1193*** 0.1199*** 0.0853*** 0.0801*** 0.0304** 0.1304*** 0.0697*** 0.0289*** 0.0061

utility bill (0.0159) (0.0162) (0.0183) (0.0150) (0.0127) (0.0183) (0.0181) (0.0097) (0.0150)
Used mobile phone to 0.1442*** -.—— 0.1844*** 0.0894*** 0.0674*** 0.0838*** 0.0031 − 0.0010 − 0.0111
receive wage payments (0.0234) (− .——) (0.0246) (0.0209) (0.0183) (0.0247) (0.0244) (0.0000) (0.0192)
Observations (N) 21,121 13,718 21,121 21,121 19,144 21,121 21,121 21,121 21,121
Pseudo R2 0.2510 0.3240 0.1030 0.1430 0.0541 0.1300 0.0690 0.0844 0.0242
Note: All probits are weighted. Marginal effects are reported for each model. Robust standard errors are presented in parentheses. Omitted categories include: Age: ≥55; Education: Tertiary; Household
income per capita: Top 20%. Recall that data on mobile money account ownership were not collected for China, Poland, Russia, and South Korea. Similarly, data were not collected on informal savings
from South Korea and UAE. *** p < 0.01, ** p < 0.05, * p < 0.1.
Table 6
Probit results for sending and receiving remittances by channel (marginal effects).
Variables Sent remittances Received remittances
Sent Sent remittances Received Received remittances

remittances remittances
Sent via fin Sent via mobile Received via fin Received via mobile
institution phone institution phone
GFI – Geometric Score ¡0.0053*** ¡0.0017 0.0063*** ¡0.0053*** ¡0.0067*** 0.0035***

(0.0005) (0.0017) (0.0015) (0.0006) (0.0016) (0.0012)
Age: 15–24 0.0260** 0.0512 0.1760*** 0.1129*** − 0.0205 0.1755***
(0.0114) (0.0339) (0.0426) (0.0131) (0.0337) (0.0395)
Age: 25–34 0.0496*** 0.0288 0.0923** 0.0712*** 0.0249 0.1665***
(0.0115) (0.0324) (0.0374) (0.0123) (0.0340) (0.0378)
Age: 35–44 0.0349*** 0.0420 0.0605 0.0324*** 0.0321 0.1163***
(0.0118) (0.0339) (0.0401) (0.0123) (0.0370) (0.0421)
Age: 45–54 0.0126 0.0417 0.0265 0.0169 0.0514 0.0788*
(0.0117) (0.0364) (0.0440) (0.0126) (0.0393) (0.0436)
Female − 0.0368*** − 0.0311 − 0.0043 − 0.0159** − 0.0014 0.0005
(0.0067) (0.0205) (0.0195) (0.0070) (0.0207) (0.0173)
Education: Primary or less − 0.0272** − 0.2172*** − 0.0163 0.0285** − 0.1955*** 0.0504
(0.0116) (0.0364) (0.0331) (0.0134) (0.0368) (0.0343)
Education: Secondary − 0.0037 − 0.0550** − 0.0195 0.0224** − 0.0477 0.0412
(0.0100) (0.0280) (0.0239) (0.0113) (0.0325) (0.0256)
Household income per capita: − 0.0860*** − 0.1052*** 0.0516 − 0.0503*** − 0.0913*** − 0.0008
Bottom 20% (0.0086) (0.0370) (0.0386) (0.0102) (0.0334) (0.0273)
Household income per capita: − 0.0659*** − 0.0638* − 0.0092 − 0.0333*** − 0.1051*** − 0.0072
Second 20% (0.0087) (0.0336) (0.0312) (0.0103) (0.0314) (0.0275)
Household income per capita: − 0.0429*** − 0.1026*** 0.0174 − 0.0308*** − 0.0205 − 0.0192
Third 20% (0.0088) (0.0307) (0.0290) (0.0100) (0.0302) (0.0244)
Household income per capita: − 0.0363*** − 0.0637** 0.0230 − 0.0262*** − 0.0099 − 0.0104
Fourth 20% (0.0087) (0.0284) (0.0268) (0.0100) (0.0301) (0.0230)
Paid employment 0.0439*** 0.0153 − 0.0530** 0.0165* 0.0385 − 0.0483**
(0.0083) (0.0227) (0.0226) (0.0085) (0.0238) (0.0193)
Works in public sector 0.0530*** 0.0044 0.0806** 0.0545*** 0.0363 0.0558
(0.0150) (0.0359) (0.0343) (0.0162) (0.0387) (0.0357)
Received government transfer 0.0575*** 0.0027 0.0556** 0.0811*** 0.0552** − 0.0246
(0.0097) (0.0255) (0.0265) (0.0103) (0.0247) (0.0204)
Has mobile phone 0.0493*** 0.1539*** 0.1213*** 0.0271*** 0.1244*** 0.0552**
(0.0095) (0.0420) (0.0332) (0.0100) (0.0332) (0.0265)
Made payments or bought 0.0993*** 0.1150*** 0.2796*** 0.0700*** 0.1333*** 0.2572***
something online (0.0097) (0.0233) (0.0207) (0.0098) (0.0240) (0.0212)
Used mobile phone to pay 0.0438*** 0.0516 0.2540*** 0.0260* 0.1088*** 0.1864***
utility bill (0.0146) (0.0317) (0.0323) (0.0149) (0.0374) (0.0358)
Used mobile phone to receive 0.1014*** 0.0978*** 0.3224*** 0.1359*** 0.0865** 0.3979***
wage payments (0.0218) (0.0378) (0.0405) (0.0234) (0.0440) (0.0481)
Observations (n) 19,144 3534 3534 19,144 3766 3766
Pseudo R2 0.0957 0.0729 0.2660 0.0531 0.0895 0.2490
Note: All probits are weighted. Marginal effects are reported for each model. Robust standard errors are presented in parentheses. The delivery
channels chosen to send and/or receive remittances were conditional on the decision to send or receive remittances. Recall also that remittance data
were not collected for South Korea and UAE. Omitted categories for each model include: Age: ≥55; Education: Tertiary; Household income per capita:
Top 20%. *** p < 0.01, ** p < 0.05, * p < 0.1.
since these respondents have fewer financial resources and have accumulated less human capital. Females also appear to be less likely
to use remittances.
6.2. Robustness checks using normalized and raw GFI scores
We re-estimated our models using both our normalized GFI score and the raw GFI score. (See Table 7.). The results are consistent
with those of the baseline models using the geometric score. For account ownership and savings and remittance decisions, the signs and
significance of the marginal effects are similar across the three GFI scores and the baseline findings reported in Tables 5 and 6. With
regards to borrowing, the results tend to be consistent across the three scores for formal borrowing, while the effects vary for informal
borrowing. Specifically, the geometric GFI score is positively associated with the likelihood of informal borrowing, while the
normalized and raw scores are negatively associated with informal borrowing. With this said, the normalized and raw scores are only
marginally significant at the 10% level, and the geometric score is significant at the 5%. The results for the geometric scores for formal
borrowing are consistently of the same sign and significant at the 1% level. Some of the variations in the marginal effects for informal
borrowing could be due to how informal borrowing is being measured. Recall that a respondent is classified as an informal borrower if
they borrowed in the past 12 months from family, relatives or friends, or an informal savings group/club. Of those who reported
borrowing informally (26.2%), almost all (94.7%) reported borrowing from family, relatives or friends, while only 12.2% reported
16
A.C. Lyons et al.
Table 7
Robustness checks for the Global Fintech Index (GFI) (marginal effects) (N = 21,121).
GFI score Accounts Savings Decisions Borrowing Decisions
indicators
Has financial Has mobile money Saved in past 12 Formal Informal Able to come up w/ Borrowed in past 12 Formal Informal
account account months savings savings emergency funds months borrowing borrowing
GFI – Geometric 0.0160*** ¡0.0019*** ¡0.0062*** 0.0047*** ¡0.0054*** 0.0072*** ¡0.0013* ¡0.0026*** 0.0013**
Score (0.0006) (0.0003) (0.0007) (0.0006) (0.0004) (0.0007) (0.0007) (0.0004) (0.0006)
GFI – Normalized 0.0260*** − 0.0023*** − 0.0104*** 0.0086*** − 0.0098*** 0.0091*** − 0.0014 − 0.0032*** − 0.0018*
Score (0.0009) (0.0004) (0.0011) (0.0010) (0.0006) (0.0011) (0.0011) (0.0007) (0.0010)
GFI – Raw Score 0.0934*** − 0.0039*** − 0.0373*** 0.0310*** − 0.0352*** 0.0326*** − 0.0051 − 0.0114*** − 0.0065*
(0.0033) (0.0013) (0.0040) (0.0034) (0.0023) (0.0041) (0.0039) (0.0024) (0.0034)
17
Sending remittances Receiving remittances
Sent remittances Sent via fin institution Sent via mobile phone Received remittances Received via fin institution Received via mobile phone
GFI – Geometric Score ¡0.0053*** ¡0.0017 0.0063*** ¡0.0053*** ¡0.0067*** 0.0035***

(0.0005) (0.0017) (0.0015) (0.0006) (0.0016) (0.0012)
GFI – Normalized Score − 0.0103*** − 0.0017 0.0069*** − 0.0106*** − 0.0098*** 0.0037**
(0.0009) (0.0026) (0.0025) (0.0009) (0.0024) (0.0018)
GFI – Raw Score − 0.0369*** − 0.0062 0.0249*** − 0.0380*** − 0.0351*** 0.0133**
(0.0031) (0.0092) (0.0089) (0.0033) (0.0088) (0.0065)
Note: Each cell presents the marginal effect for the respective GFI Score, generated by estimating separate probit regressions for each financial behavior. Each regression includes the same set of control
variables and number of observations as in the previous models presented in Tables 5 and 6. In total, 45 regressions were estimated. All models were weighted. Robust standard errors are presented in
parentheses. Omitted categories include: Age: ≥55; Education: Tertiary; Household income per capita: Top 20%. *** p < 0.01, ** p < 0.05, * p < 0.1.

Table 8
Heterogeneous relationship between fintech development and financial inclusion across regions using the geometric GFI score (marginal effects).
Latin America Asia Other regions
(n = 4986, 23.6%) (n = 9349, 44.3%) (n = 6786, 32.1%)
Account and savings decisions

Has financial account 0.0121*** 0.0106*** 0.0025
Has mobile money accounta − 0.0024*** 0.0002 0.0003
Saved in past 12 months − 0.0062*** − 0.0127*** − 0.0411***
Formal savings 0.0012 − 0.0002 − 0.0301***
Informal savingsb − 0.0006 − 0.0062*** − 0.0225***
Able to come up with emergency funds 0.0065*** 0.0066*** − 0.0110***
Borrowing decisions
Borrowed in past 12 months − 0.0012 − 0.0029*** − 0.0172***
Formal borrowing − 0.0025** − 0.0038*** 0.0009
Informal borrowing − 0.0034*** 0.0017* − 0.0126***
Sending remittances decisions
Sent remittancesb − 0.0056*** − 0.0030*** − 0.0259***
Sent via financial institutionc 0.0074 − 0.0040 − 0.0269***
Sent via mobile phonec − 0.0052** 0.0139*** 0.0279***
Receiving remittances decisions
Received remittancesb − 0.0059*** − 0.0031*** − 0.0300***
Received via financial institutionc 0.0146** − 0.0072*** − 0.0290***
Received via mobile phonec 0.0000 0.0081*** 0.0366***
Note: Each cell presents the marginal effect for the geometric GFI Score, generated by estimating separate probit regressions for each financial
behavior for each of the three region categories. Each regression includes the same set of control variables and number of observations as in the
models presented in Tables 5 and 6. In total, 45 regressions were estimated. All models were weighted. Omitted categories include: Age: ≥55; Ed
ucation: Tertiary; Household income per capita: Top 20%. *** p < 0.01, ** p < 0.05, * p < 0.1.
a
Recall that data on mobile money account ownership were not collected for China, Poland, Russia, and South Korea and so there are no ob
servations in “Other regions” for Europe, only Africa and Middle East.
b
Data were not collected on informal savings and remittances for South Korea and UAE so the sample sizes are reduced for “Asia” and “Other
regions.”
c
The delivery channels chosen to send and/or receive remittances were conditional on the decision to send or receive remittances and so are also
based on reduced-sample sizes.
borrowing from a savings group/club. As such, borrowing from family and friends is not likely to be impacted by fintech development
as much as borrowing from banks or non-bank financial institutions.
6.3. Heterogeneities across regions
Table 8 presents the results for the models re-estimated for Latin America and Asia. The countries from the other regions are
grouped together as a final comparison group. Each cell in the table presents the marginal effect for the geometric GFI score that was
generated by estimating a separate probit regression for that specific financial behavior. Heterogeneities exist across regions, but the
differences are fairly minor.11 In terms of account ownership, fintech development is positively associated with formal financial ac
count ownership for both Latin America and Asia, but negatively associated with MMA ownership for Latin America. There is a strong
negative relationship between fintech development and having saved in the past 12 months for all regions. A positive relationship is
found for Latin America and Asia when it comes to emergency funds. Living in a country with better fintech development, however,
appears to be negatively related to the ability to come up with emergency funds in other regions. Borrowing behaviors tend to be
negatively associated with improvements in fintech development. The exception is for informal borrowing, which shows a negative
relationship in Latin America and other regions but a positive correlation in Asia. Similar negative trends are observed for remittances.
However, there are differences when it comes to the delivery channel used to send or receive transfers. For example, increases in
fintech development are significantly associated with an increase in the likelihood of respondents using mobile phones to send and
receive remittances in Asia and other regions, whereas there is a decrease in the likelihood of sending remittances by mobile phone in
Latin America and no effect for receiving remittances. Interestingly, when it comes to receiving remittances via financial institutions,
increases in the geometric GFI score are associated with an increase in the likelihood of receiving remittances via financial institutions
in Latin America, versus a decrease in Asia and other regions.
11
Recall that the GFI is a country-level variable that has the same value for all individuals living in that particular country. When it is included in
the models, it serves as a country-fixed effect that captures the state of development of a country’s fintech ecosystem. Thus, the analysis by region
could be impacted when we break the regressions down for Asia (China, India, Indonesia, Malaysia, and South Korea), Latin America (Argentina,
Brazil, Chile, Colombia, and Mexico), and other regions (Nigeria, Poland, Russia, South Africa, Turkey, and UAE), since each of these regions now
includes an even smaller number of countries. If more countries were included in each region, we might have found more heterogeneity.
18
Table 9
Probit results for households’ savings, borrowing, and remittance decisions for emerging economies with interaction terms for the GFI and vulnerable
populations (marginal effects).
Interactions for households’ financial decisions (N = 21,121) GFI – Geometric Score interacted with each of the following groups
Youth (age 15–24) Aging (age ≥ 55) Female Less educated Poorest 20%
Account and savings decisions

Has financial account 0.0001 − 0.0058*** 0.0014 0.0045*** − 0.0012
Has mobile money accounta − 0.0006 − 0.0000 − 0.0008 − 0.0003 0.0003
Saved in past 12 months − 0.0090*** 0.0071*** − 0.0030** 0.0025* − 0.0062***
Formal savings − 0.0051*** 0.0018 − 0.0001 0.0059*** − 0.0046***
Informal savings − 0.0003 0.0008 − 0.0020** − 0.0025*** − 0.0011
Able to come up with emergency funds − 0.0010 − 0.0048*** 0.0003 − 0.0059*** − 0.0106***
Borrowing decisions
Borrowed in past 12 months − 0.0035** 0.0056*** 0.0002 0.0061*** 0.0065***
Formal borrowing 0.0020* 0.0016 − 0.0011 0.0017* 0.0018*
Informal borrowing − 0.0059*** 0.0066*** − 0.0016 0.0069*** 0.0065***
Sending remittances decisions
Sent remittancesb − 0.0018 0.0028** − 0.0011 0.0011 − 0.0004
Sent via financial institutionb 0.0004 − 0.0002 − 0.0016** − 0.0001 − 0.0029**
Sent via mobile phoneb − 0.0005 − 0.0016** − 0.0003 − 0.0006 0.0005
Receiving remittances decisions
Received remittancesb − 0.0031** 0.0007 − 0.0035*** 0.0010 0.0009
Received via financial institutionb − 0.0012 0.0028** − 0.0017** 0.0009 − 0.0005
Received via mobile phoneb − 0.0006 − 0.0016** − 0.0001 0.0000 0.0005
Notes: Each cell represents the marginal effect for the geometric GFI Score interacted with that particular vulnerable group (youth, older, female, less
educated, or poorest 20). Each marginal effect was generated by estimating separate probit regressions for each financial inclusion measure con
trolling for the interaction term (VulnerableGroupij*GFIScorej), the geometric GFI score, a dummy variable for the vulnerable group of interest, and the
set of individual-level control variables included in the other models presented in this paper. In total, 75 regressions were estimated. All probits were
weighted. Robust standard errors are in parentheses. *** p < 0.01, ** p < 0.05, * p < 0.1.
a
Recall that data for mobile money account are based on a reduced sample size due to missing values (n = 13,718).
b
Data were not collected on informal savings and remittances for South Korea and UAE so the sample sizes are reduced for these models (n =
19,144).
6.4. Heterogeneities across vulnerable populations
Our baseline models presented in Tables 5 and 6 assume that a country’s level of fintech development relates equally to all in
dividuals in that country. However, as some segments are more likely to be financially and digitally excluded, it is important to
examine more closely how the relationship between a country’s fintech ecosystem and an individuals’ specific financial behaviors vary
for key populations. To this end, we include interactions between a country’s geometric GFI score and the individual-level charac
teristics capturing potential vulnerabilities due to age, gender, education, and income.12 Table 9 presents the marginal effects at the
mean values for only the interaction terms (VulnerableGroupij*GFIScorej), which were generated by estimating separate probit models
for each financial inclusion measure. The interaction term for each model reveals how responsive a vulnerable populations’ financial
behavior is to an increase (or decrease) in the country’s GFI score..13
Recall that in Table 5 the GFI score was positively associated with the likelihood of owning a financial account, but negatively
associated with savings, and informal savings in particular. When it comes to account ownership, Table 9 shows that those who are 55
years or older (aging adults) tend to be less responsive to increases in fintech development relative to those who are less than 55 years
of age (non-aging adults) – a 0.58 percentage point difference.14 More precisely, when the full marginal effects are calculated, a one-
unit increase in the GFI score is associated with an increase in the likelihood of account ownership by 1.14 percentage points for aging
adults compared to a larger increase of 1.72 percentage points for non-aging adults – hence, the 0.58 difference. This finding is perhaps
not suprising as younger populations are more likely to have a greater interest or willingness to adopt new technologies than those who
are older, even if the technologies are more readily available. Conversely, those who are less educated are more responsive to fintech
development than those who are more educated, resulting in a 0.45 percentage point difference. A one-unit increase in the GFI score is
associated with a 1.82 percentage point increase in account ownership for those with primary education or less compared to a 1.37
12
The models were also re-estimated using the normalized and raw GFI scores. For the most part, the results were consistent regardless of the GFI
score used. The estimations are available from the authors upon request.
13
Note that the marginal effects do not capture the full marginal effects of the interaction terms. To determine the full effect of the GFI score for
each of the vulnerable groups and their counterparts, we need to use the full regression results to calculate α1GFIScorej + β1VulnerableGroupij +
β2VulnerableGroupij*GFIScorej. The complete set of regression results and related calculations, which capture the full marginal effects of the
interaction terms are available upon request.
14
In the case of aging versus non-aging adults, the probability of having a financial account (P(FinAcct = 1)) is equal to α1GFIScorej + β1Vul
nerableGroupij + β2VulnerableGroupij*GFIScorej, where VulnerableGroupij is equal to one (i.e., AgingAdults = 1). If AgingAdults = 0, the equation is
reduced to α1GFIScorej, since VulnerableGroupij is now equal to zero.
19
percentage point increase for those with more than primary education, resulting in the 0.45 percentage point difference. Those who are
less educated may be more responsive because fintech has removed barriers to access and financial inclusion initiatives have expanded
account ownership for those with lower socioeconomic status. As for ownership of MMAs, no statistically significant disparities are
identified between the vulnerable and non-vulnerable populations.
In terms of having saved in the past 12 months, the results when the full marginal effects are calculated show that improvements in
fintech development are associated with decreases in the likelihood of saving for all vulnerable and non-vulnerable groups alike. This is
despite the relative gaps reported in Table 9. For instance, the negative savings relationship is found to be relatively stronger for youth
adults, females, and the poorest 20% of the population, but relatively weaker for aging adults and the less educated.15 Similar trends
are observed for formal and informal savings, where consistent relationships with fintech development (positive for formal and
negative for informal savings) are found among vulnerable groups and their counterparts, although there are some relative disparities.
These findings suggest that, while fintech development may be enough to foster account ownership, it may not be enough to generate
wealth and savings accumulation. Young adults and the poor are likely facing additional barriers because of their stage in the life-cycle
and/or their socioeconomic status and lack of financial resources to deposit into a financial account.
When it comes to the ability to secure an emergency fund, Table 5 found a positive relationship with more developed fintech
ecosystems. Table 9 further reveals that the aging and the less educated are less responsive to fintech than their counterparts by 0.48
and 0.59 percentage points, respectively. The 1.06 percentage point gap for the poorest reflects a more serious disparity. Interestingly,
while the likelihood of being able to secure emergency funds increases by 0.91 of a percentage point for the top four income quintiles, it
decreases by 0.15 of a percentage point for the poorest quintile (0.91 minus − 0.15, resulting in a gap of 1.06). This again highlights the
existence of additional barriers facing the poor, even in countries with better fintech and economic development, which hinder their
capacity to face shocks.
For general borrowing, Table 5 showed that in countries with higher GFI scores, respondents were less likely to have borrowed in
the last 12 months. Table 9 reveals that this negative relationship is strongest for those who are younger. When the full marginal effects
are calculated, the relationship turns positive for the aging, the less educated, and the poorest, while it remains negative for their
counterparts, indicating an increased probability of borrowing for these vulnerable segments. The positive relationship between
fintech and borrowing for the poor and less educated could simply be reflecting that more developed fintech ecosystems are in fact
reducing barriers to entry in the credit markets and improving access to borrowing. Developments in fintech have led to the creation of
a wide array of new financial products and services specifically designed for vulnerable populations, especially in the informal credit
markets. For the same reason, borrowing may have decreased among non-vulnerable populations, because they do not have to rely as
heavily on traditional borrowing, as they now have access to more choices when it comes to raising capital and generating wealth.
For informal borrowing, the aging and the poorest are more responsive than their counterparts to increases in the GFI score. For
education, the full marginal effects show that the likelihood of informally borrowing increases by 0.52 of a percentage point for the less
educated, but decreases by 0.17 of a percentage point for the more educated (0.52 minus − 0.17, resulting in a gap of 0.69). Youth are
less responsive to fintech development relative to those who are older. The full marginal effects reveal that this negative gap results
from a larger negative relationship between financial development and informal borrowing for youth versus a smaller positive rela
tionship for those who are older. These findings suggest that in countries with improved fintech ecosystems, the more educated and
youth are less likely to rely on family and friends or even informal savings clubs to borrow money, perhaps because they can more
easily access alternative sources of borrowing.
In terms of remittances, differences in the effects of fintech development between the vulnerable and non-vulnerable groups are not
as significant as those for account ownership, savings, and borrowing. However, one notable distinction is the existence of a statis
tically significant gender gap. Recall that a negative relationship was found in Table 6 between the GFI score and the decisions to send
and receive remittances (especially via a financial institution rather than a mobile phone). Table 9 shows that this negative relationship
is stronger for females relative to males – in particular, women are 0.35 of a percentage point less likely than males to be receiving
remittances.
In summary, the interaction findings provide evidence of important heterogeneities when it comes to how fintech development
correlates with financial inclusion. While fintech is found to be associated with greater access for some traditionally vulnerable groups,
others seem to still be facing additional barriers that need to be tackled so that fintech can more efficiently improve access for
vulnerable populations.
7. Conclusions
Overall, this study used the Gobal Fintech Index (GFI) to examine the relationship between fintech development and demand for
savings, borrowing, and remittances for the world’s largest emerging economies. Our results showed that a country’s level of fintech
development is highly related to improvements in financial inclusion in emerging economies. Nevertheless, heterogeneities were
found across populations and regions. Also, for some financial behaviors (such as savings), more developed fintech ecosystems were
15
If the GFI score increases by one unit, the likelihood of savings decreases by an additional 0.90, 0.30, and 0.62 percentage points for youth,
females, and the poorest 20% compared to their respective groups. According to the full marginal effects, the probability that savings decreases is
0.71 and 0.25 percentage points less for aging adults and the less educated, respectively. For instance, the probability of savings decreases by only
0.04 of a percentage point for those who are 55 or older compared to 0.75 of a percentage point for those less than 55 years of age, resulting in the
positive gap of 0.71 that is reported in Table 9.
20
found to translate to greater access, but not necessarily to greater usage of those financial services.
The development of fintech ecosystems is playing a key role in enhancing the accessibility and affordability of financial services.
Fintech ecosystems are driving innovations in DFS and expanding the range of financial products available to individuals, while also
contributing to improvements in the services offered by traditional financial institutions through heightened competition. However,
these dynamics are not necessarily resulting in increased demand and usage for these services, especially among vulnerable pop
ulations who remain less likely to reap the benefits of such technological advancements. While fintech has addressed many barriers,
some demand-side factors continue to hinder the uptake and actual usage of financial services. These persisting challenges call for
broader policy interventions that address additional issues related to cost, trust, and literacy.
In several emerging economies, especially those in Latin America, the high cost of accounts remains a major factor that prevents
account ownership (Demirgüç-Kunt et al., 2018). One way of lowering costs is to fuel competition among financial service providers by
facilitating the entry of new market players. For instance, in Mexico, where account penetration is low, mobile money services are not
allowed through non-bank providers, hindering competition (Navis et al., 2020; Roa et al., 2017). Also, in terms of remittances, we still
see the persistence and reliance on cash as the key delivery channel rather than mobile money. From this perspective, legal and
regulatory flexibility is essential to reducing barriers to market entry for new providers, as well as to foster competition and the
development of a wider range of innovative, lower-cost financial products and services (Lyons and Kass-Hanna, 2020b). Regulations
should simultaneously address the safety and soundness of these services to ensure consumers’ protection and trust. In fact, lack of
trust in the traditional banking system continues to be an important issue for many, especially in Latin American countries (Navis et al.,
2020; Roa et al., 2017). This can result in less account uptake, and also in limited usage of accounts that have already been opened.
Take, for example, India and Brazil, which have experienced high rates of account ownership in recent years, but have had low savings
rates for many of the reasons previously cited, including a lack of trust (Abraham, 2019; Banco Central do Brasil, 2018; Cordeiro, 2019;
Pazarbasioglu et al., 2020).
With the development of DFS and the diversification of service providers, consumer protection measures have also become more
essential to protect those who are the most vulnerable to frauds and scams. These measures entail regulatory and supervisory pro
cedures, but also “indirect” practices to raise awareness about how to use DFS while ensuring that assests and personal information are
kept safe. The latter can be implemented through digital financial literacy programs that strengthen citizens’ knowledge of the ad
vantages and risks associated with DFS, thus encouraging their adoption and active usage (Lyons and Kass-Hanna, 2021a). Such
programs should be integrated into broader financial literacy efforts and designed as part of holistic educational strategies that
improve individuals’ confidence in making informed financial decisions, and empower them to use appropriate financial services to
build financial security and resilience (Kass-Hanna et al., 2021; Lyons and Kass-Hanna, 2020b).
Currently, the COVID-19 pandemic continues to speed up the transition to DFS. In the coming years, the availability and usage of
DFS in emerging and developing economies will continue to take center stage. It remains to be seen how the fintech landscape will be
impacted and whether it will remain sufficiently competitive in the post-COVID period. There is further uncertainty as to whether the
accelerated transition to DFS will enhance or hinder current levels of financial inclusion, as inequalities in access to digital infra
structure are rapidly widening (Lyons and Kass-Hanna, 2020a; Sahay et al., 2020). Our findings provide insights into which groups
may be particularly vulnerable to rapid shifts in fintech development and DFS. The results point to several pre-COVID gaps in how
fintech development in emerging economies is related to various aspects of financial inclusion for populations by gender, age, edu
cation, income, and geographical location. Our work identifies those at-risk populations that could be best helped by public and private
sector efforts to expand fintech development. At the same time, it also points to significant digital (or fintech) divides for populations
that still face structural barriers to financial inclusion and remain highly reliant on informal financial services and brick ‘n mortar
financial institutions. As highlighted above, these populations are likely to require additional enabling support that goes beyond digital
infrastructure and fintech development to include regulation, supervision, consumer protections, and financial and digital literacy.
Finally, we acknowledge a few limitations of our study. First, our measure of fintech development (the GFI score) was constructed
at the country level through a proprietary algorithm based on data gathered from fintech companies, which were registered on the
Findexable map (https://findexable.com/). Concerns about the comprehensiveness of the inputs, as well as the clarity and rigor of the
methodology, are thus legitimate. Even so, this first index of fintech ecosystems, which is still at an early stage of development, proves
to be informational. Second, the associations between countries’ fintech development and individuals’ demand for financial services
may or may not indicate that a causal relationship exists due to potential endogeneity and ommited variable bias. For example, fintech
may promote financial inclusion, but an increase in financial inclusion may also result in the more rapid development of financial
technologies. Also, due to the cross-sectional nature of the data we are uanble to control simultaneously for other country-fixed effects.
Therefore, our measure for fintech development could be capturing a country’s general level of economic development. For these
reasons, we have been careful to report the results as correlations, but not as causal relationships. If we had longitudinal data, we could
use the variation in the time that it takes for a country to adopt DFS to identify the causal effect of fintech development on financial
inclusion and control for other country-fixed effects as well. This type of longitudinal approach would be able to capture the different
stages of development of each country aside from that related to fintech development. Regardless, this study constitutes a valuable
starting point for industry, researchers, and policymakers to assess the scale and development of fintech ecosystems and better un
derstand the linkages to financial inclusion, including the opportunities and limitations of DFS moving forward in the post-COVID era.
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Emerging Markets Review 51 (2022) 100842

Contents lists available at ScienceDirect

Emerging Markets Review

Fintech development and savings, borrowing, and remittances: A

2. Background and literature review

2.1. Measuring financial inclusion

2.2. The digital financial services landscape

2.3. Linkages between fintech development and financial inclusion

3.1. Measuring financial inclusion

3.2. Measuring fintech development

Fig. 1. Comparison of Global Fintech Index (GFI) Scores.

A.C. Lyons et al.

Information and communications technology infrastructure

Emerging Markets Review 51 (2022) 100842

Emerging Markets Review 51 (2022) 100842

Emerging Markets Review 51 (2022) 100842

GFI indicators (country-level data)

Usage of digital financial services (DFS) (respondent-level data)

Emerging Markets Review 51 (2022) 100842

Financial inclusion measures

Digital financial inclusion measures

Usage of digital financial services (DFS)

Emerging Markets Review 51 (2022) 100842

FinAcctij * = α1 GFIScorej + VulnerableGroupij ’β1 + Xij ’γ 1 + εij ,

6.1. Results for baseline models using geometric GFI score

A.C. Lyons et al.

Emerging Markets Review 51 (2022) 100842

Sent Sent remittances Received Received remittances

GFI – Geometric Score ¡0.0053*** ¡0.0017 0.0063*** ¡0.0053*** ¡0.0067*** 0.0035***

6.2. Robustness checks using normalized and raw GFI scores

Sending remittances Receiving remittances

GFI – Geometric Score ¡0.0053*** ¡0.0017 0.0063*** ¡0.0053*** ¡0.0067*** 0.0035***

Emerging Markets Review 51 (2022) 100842

Account and savings decisions

6.3. Heterogeneities across regions

Account and savings decisions

6.4. Heterogeneities across vulnerable populations

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GFI – Geometric Score ¡0.0053* ¡0.0017 0.0063* ¡0.0053* ¡0.0067* 0.0035***

GFI – Geometric Score ¡0.0053* ¡0.0017 0.0063* ¡0.0053* ¡0.0067* 0.0035***