Determinants of digital finance in India

ABSTRACT

Digital finance can act as a catalyst to promote the growth of financial inclusion. Since 2014, the Indian government has taken various steps to uplift the use of digital finance, one of them is demonetization. It was a major initiative by the government to move society towards cashless economy. In spite of large-scale demonetization overwhelming majority are not using digital finance in India. In this context, this study aims to evaluate the determinants and the impact of demonetization on digital finance and also whether demonetization has enhanced or reduced the pre-existing gender gap in terms of digital finance in case of India. Findings suggest that being a man, richer, more educated and older favours digital technology to avail financial services. The impact of education and income level on use of digital finance are more pronounced in post demonetization period (2017) than pre demonization period (2014). Results on gender gap have strongly proven this fact, but a positive gap still exits, implying women are still lagging behind than men.

KEYWORDS:

• Demonetization
• financial inclusion
• digital finance
• education
• gender gap
• India

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 See: https://www.centerforfinancialinclusion.org/indias-demonetization-one-year-later-what-was-the-impact-on-financial-inclusion

2 See https://microdata.worldbank.org/index.php/catalog/2433#:~:text=The%20Global%20Findex%20indicators%20are,be%20collected%20again%20in%202017.

3 See https://microdata.worldbank.org/index.php/catalog/3362/study-description

4 See https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10684&Mode=0

5 According to national youth policy 2014, youth age group is defined as 15–29 years.