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Epidemic Exposure, Financial Technology, and the Digital Divide

Author

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  • Saka, Orkun

    (University of London)

  • Eichengreen, Barry

    (University of California, Berkeley)

  • Aksoy, Cevat Giray

    (European Bank for Reconstruction and Development)

Abstract

We ask whether epidemic exposure leads to a shift in financial technology usage and who participates in this shift. We exploit a dataset combining Gallup World Polls and Global Findex surveys for some 250,000 individuals in 140 countries, merging them with information on the incidence of epidemics and local 3G internet infrastructure. Epidemic exposure is associated with an increase in remote-access (online/mobile) banking and substitution from bank branch-based to ATM activity. The temporary nature of the effects we identify is more consistent with a demand channel rather than that of supply with high initial fixed costs. Exploring heterogeneity using a machine-learning driven approach, we find that young, high-income earners in full-time employment have the greatest tendency to shift to online/mobile transactions in response to epidemics. Baseline effects are larger for individuals with better ex ante 3G signal coverage, highlighting the role of the digital divide in adaption to new technologies necessitated by adverse external shocks.

Suggested Citation

  • Saka, Orkun & Eichengreen, Barry & Aksoy, Cevat Giray, 2022. "Epidemic Exposure, Financial Technology, and the Digital Divide," IZA Discussion Papers 15200, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15200
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    Cited by:

    1. Lucas A. Mariani & Jose Renato Haas Ornelas & Bernardo Ricca, 2023. "Banks’ Physical Footprint and Financial Technology Adoption," Working Papers Series 576, Central Bank of Brazil, Research Department.
    2. Jan Krzysztof Solarz & Krzysztof Waliszewski, 2022. "Pandemia COVID‑19 z perspektywy finansów – przenikanie się świata realnego i wirtualnego," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 2, pages 213-234.
    3. Mariani, Lucas A. & Haas Ornelas, José Renato & Ricca, Bernardo, 2023. "Banks’ Physical Footprint and Financial Technology Adoption," IDB Publications (Working Papers) 12812, Inter-American Development Bank.
    4. Silva, Thiago Christiano & de Souza, Sergio Rubens Stancato & Guerra, Solange Maria & Tabak, Benjamin Miranda, 2023. "COVID-19 and bank branch lending: The moderating effect of digitalization," Journal of Banking & Finance, Elsevier, vol. 152(C).
    5. Apeti, Ablam Estel & Bambe, Bao-We-Wal & Combes, Jean-Louis & Edoh, Eyah Denise, 2024. "Original sin: Fiscal rules and government debt in foreign currency in developing countries," Journal of Macroeconomics, Elsevier, vol. 80(C).
    6. Ablam Estel Apeti & Jean-Louis Combes & Eyah Denise Edoh, 2023. "Entrepreneurship in developing countries: can mobile money play a role?," Working Papers hal-04081304, HAL.
    7. Raphael Auer & Giulio Cornelli & Jon Frost, 2022. "The pandemic, cash and retail payment behaviour: insights from the future of payments database," BIS Working Papers 1055, Bank for International Settlements.
    8. Carbó-Valverde, Santiago & Cuadros-Solas, Pedro J. & Rodríguez-Fernández, Francisco & Sánchez-Béjar, José Juan, 2023. "Mobility restrictions and payment choices: The case of the Covid-19 pandemic," Journal of Behavioral and Experimental Finance, Elsevier, vol. 40(C).

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    More about this item

    Keywords

    epidemics; fintech; banking;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G59 - Financial Economics - - Household Finance - - - Other
    • I10 - Health, Education, and Welfare - - Health - - - General

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