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The COVID-19 Pandemic and Indonesia’s Fintech Markets

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  • Eric Alexander Sugandi

    (Asian Development Bank Institute)

Abstract

We investigate the impacts of the COVID-19 pandemic and the large-scale social distancing (PSBB) policy on Indonesia’s financial technology (fintech) markets. We also elaborate on the roles fintech companies can play in the national economic recovery. We find that Indonesia’s fintech markets were relatively resilient during the COVID-19 pandemic. The pandemic did not have significant impacts on Indonesia’s fintech markets, but the PSBB harmed phone banking, mobile banking, and internet banking transaction values as well as peer-to-peer (P2P) fintech lending. Nevertheless, the PSBB increased electronic money transactions. The relatively short PSBB period prevented the restrictions on economic activities from imposing too much damage on the fintech markets. The Indonesian authorities involved the fintech industry as a component of the national economic recovery program (PEN), particularly the pre-employment card (Kartu Prakerja) program. There are still many areas in which the government can utilize the fintech industry for economic recovery, including direct cash transfers to poor households and extensions of subsidized loans for micro, small, and medium-sized enterprises (MSMEs).

Suggested Citation

  • Eric Alexander Sugandi, 2021. "The COVID-19 Pandemic and Indonesia’s Fintech Markets," ADBI Working Papers 1281, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:1281
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    References listed on IDEAS

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    1. Ms. Ratna Sahay & Mr. Ulric Eriksson von Allmen & Ms. Amina Lahreche & Purva Khera & Ms. Sumiko Ogawa & Majid Bazarbash & Ms. Kimberly Beaton, 2020. "The Promise of Fintech: Financial Inclusion in the Post COVID-19 Era," IMF Departmental Papers / Policy Papers 2020/009, International Monetary Fund.
    2. Erel, Isil & Liebersohn, Jack, 2020. "Does FinTech Substitute for Banks? Evidence from the Paycheck Protection Program," Working Paper Series 2020-16, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    3. Roberto Moro-Visconti & Salvador Cruz Rambaud & Joaquín López Pascual, 2020. "Sustainability in FinTechs: An Explanation through Business Model Scalability and Market Valuation," Sustainability, MDPI, vol. 12(24), pages 1-24, December.
    4. Isil Erel & Jack Liebersohn, 2020. "Does FinTech Substitute for Banks? Evidence from the Paycheck Protection Program," NBER Working Papers 27659, National Bureau of Economic Research, Inc.
    5. Angela Tritto & Yujia He & Victoria Amanda Junaedi, 2020. "Governing the gold rush into emerging markets: a case study of Indonesia’s regulatory responses to the expansion of Chinese-backed online P2P lending," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-24, December.
    6. Tut, Daniel, 2023. "FinTech and the COVID-19 pandemic: Evidence from electronic payment systems," Emerging Markets Review, Elsevier, vol. 54(C).
    7. Chaikal Nuryakin & Lovina Aisha & Natanael Waraney Gerald Massie, 2019. "Financial Technology in Indonesia: A Fragmented Instrument for Financial Inclusion?," LPEM FEBUI Working Papers 201936, LPEM, Faculty of Economics and Business, University of Indonesia.
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    Cited by:

    1. Karim, Sitara & Naz, Farah & Naeem, Muhammad Abubakr & Vigne, Samuel A., 2022. "Is FinTech providing effective solutions to Small and Medium Enterprises (SMEs) in ASEAN countries?," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 335-344.

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    More about this item

    Keywords

    fintech; Indonesia; MSMEs;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O39 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Other

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