Mobile Technologies, Financial Inclusion, and Inclusive Growth in East Indonesia
Main Article Content
Keywords
Financial Inclusion, Mobile technologies, Inclusive Growth, Financial institutions, Indonesia
Abstract
This paper examines the influence of mobile technologies on financial inclusion, and the matter of whether mobile technologies and financial inclusion have an impact on the income of individuals in East Indonesia, considering the data from the Survey on Financial Inclusion and Access (SOFIA) in 2017. A seemingly unrelated probit model and an ordinary least-squares model are used to compare both determinants of formal and informal financial services, as well as simple and smart mobile technologies. The study finds that mobile technologies and access to finance significantly increase the likelihood of higher incomes. Smart technologies and formal finance have higher effects on incomes compared to the effects of simple devices or semi-formal and informal finance. Significant gaps in financial access exist between individuals in accordance with gender, income, education, and location. Technologies account for a small difference in the broader access to financial services.
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References
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Dupas, P., & Robinson, J. (2013). Savings constraints and microenterprise development: Evidence from a field experiment in Kenya. American Economic Journal: Applied Economics, 5(1), 163–92. https://doi.org/10.21098/bemp.v20i4.859
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Fungá?ová, Z., & Weill, L. (2015). Understanding financial inclusion in China. China Economic Review, 34, 196–206. https://doi.org/10.1016/j.chieco.2014.12.004
Ghosh, S., & Vinod, D. (2017). What Constrains Financial Inclusion for Women? Evidence from Indian Micro data. World Development, 92, 60–81. https://doi.org/10.1016/j.worlddev.2016.11.011
Greene, W. H. (2003). Econometric analysis (5th Ed.). Englewood Cliffs, NJ: Prentice Hall.
Grohmann, A., Klühs, T., & Menkhoff, L. (2018). Does financial literacy improve financial inclusion? Cross country evidence. World Development, 111, 84–96. https://doi.org/10.1016/j.worlddev.2018.06.020
Han, R., & Melecky, M. (2013). Financial inclusion for financial stability: Access to bank deposits and the growth of deposits in the global financial crisis. The World Bank. https://doi.org/10.1596/1813-9450-6577
Hanh, T. M. P., Daly, K., & Akhter, S. (2016). Bank efficiency in emerging Asian countries. Research in International Business and Finance, 38, 517–530. https://doi.org/10.1016/j.ribaf.2016.07.012
Kostov, P., Arun, T., & Annim, S. (2015). Access to financial services: The case of the ‘Mzansi’ account in South Africa. Review of Development Finance, 5(1), 34–42. https://doi.org/10.1016/j.rdf.2015.04.001
Llanto, G. (2015). Financial inclusion, education, and regulation in the Philippines. https://doi.org/10.2139/ssrn.2672722
Martínez, C. H., Hidalgo, X. P., & Tuesta, D. (2013). Demand factors that influence financial inclusion in Mexico: Analysis of the barriers based on the ENIF survey. BBVA Bank, BBVA Research Working Paper, 1–19.
Mehrotra, A., & Yetman, J. (2015). Financial inclusion-issues for central banks. BIS Quarterly Review March. Available at SSRN: https://ssrn.com/abstract=2580310
OECD. (2018). Financial inclusion and consumer empowerment in Southeast Asia. OECD.
Ouma, S. A., Odongo, T. M., & Were, M. (2017). Mobile financial services and financial inclusion: Is it a boon for savings mobilization? Review of Development Finance, 7(1), 29–35. https://doi.org/10.1016/j.rdf.2017.01.001
Park, C.-Y., & Mercado, R. (2015). Financial inclusion, poverty, and income inequality in developing Asia. Asian Development Bank Economics Working Paper Series, 426. https://doi.org/10.2139/ssrn.2558936
Potnis, D. D. (2015). Beyond Access to Information: Understanding the Use of Information by Poor Female Mobile Users in Rural India. The Information Society, 31(1), 83–93. https://doi.org/10.1080/01972243.2014.976687
Riwayati, H. E. (2017). Financial Inclusion of Business Players in Mediating the Success of Small and Medium Enterprises in Indonesia. International Journal of Economics and Financial Issues, 7(4), 623–627.
Rosengard, J. K., & Prasetyantoko, A. (2011). If the Banks are Doing So Well, Why Can’t I Get a Loan? Regulatory Constraints to Financial Inclusion in Indonesia. Asian Economic Policy Review, 6(2), 273–296. https://doi.org/10.1111/j.1748-3131.2011.01205.x
Rowntree, O. (2018). GSMA Connected Women–The Mobile Gender Gap Report 2018. Report. GSMA, Cambridge, MA.
Sanjaya, I. M., & Nursechafia, N. (2016). Financial Inclusion And Inclusive Growth: A Cross-Province Analysis In Indonesia. Buletin Ekonomi Moneter Dan Perbankan, 18(3), 281–306. https://doi.org/10.21098/bemp.v18i3.551
Suri, T., & Jack, W. (2016). The Long-Run Poverty and Gender Impacts of Mobile Money. Science, 354 (6317), 1288–92. https://doi.org/10.1126/science.aah5309.
Survey on Financial Inclusion and Access (SOFIA). (2017). https://www.opml.co.uk/projects/survey-financial-inclusion-access-sofia
Swamy, V. (2014). Financial Inclusion, Gender Dimension, and Economic Impact on Poor Households. World Development, 56, 1–15. https://doi.org/10.1016/j.worlddev.2013.10.019
Tambunan, T. T. (2018). MSMEs and Access to Financing in a Developing Economy: The Indonesian Experience. In Financial Entrepreneurship for Economic Growth in Emerging Nations (pp. 148–172). IGI Global. https://doi.org/10.4018/978-1-5225-2700-8.ch008
Wang, X., & Guan, J. (2017). Financial inclusion: Measurement, spatial effects and influencing factors. Applied Economics, 49(18), 1751–1762. https://doi.org/10.1080/00036846.2016.1226488
International Telecommunication Union (ITU), (2018) “World telecommunication/ICT indicators database, “ ITU, Geneva
Yoshino, N., & Morgan, P. (2016). Overview of Financial Inclusion, Regulation, and Education. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2838114
Zins, A., & Weill, L. (2016). The determinants of financial inclusion in Africa. Review of Development Finance, 6(1), 46–57. https://doi.org/10.1016/j.rdf.2016.05.001
Abor, J. Y., Amidu, M., & Issahaku, H. (2018). Mobile telephony, financial inclusion and inclusive growth. Journal of African Business, 19(3), 430–453. https://doi.org/10.1080/15228916.2017.1419332
Allen, F., Demirguc-Kunt, A., Klapper, L., & Martinez Peria, M. S. (2016). The foundations of financial inclusion: Understanding ownership and use of formal accounts. Journal of Financial Intermediation, 27(C), 1–30. https://doi.org/10.1016/j.jfi.2015.12.003
Allen, F., Demirguc-Kunt, A., Klapper, L., & Peria, M. S. M. (2012). Foundations of Financial Inclusion. Policy Research Working Paper, 6290. The World Bank.
Allen, F., Qian, M., & Xie, J. (2018). Understanding informal financing. Journal of Financial Intermediation. https://doi.org/10.1016/j.jfi.2018.06.004
Arun, T., & Kamath, R. (2015). Financial inclusion: Policies and practices. IIMB Management Review, 27(4), 267–287. https://doi.org/10.1016/j.iimb.2015.09.004
Asongu, S. (2015). The impact of mobile phone penetration on African inequality. International Journal of Social Economics, 42(8), 706–716. https://doi.org/10.1108/IJSE-11-2012-0228
Asongu, S. A. (2013). How has mobile phone penetration stimulated financial development in Africa? Journal of African Business, 14(1), 7–18. https://doi.org/10.1080/15228916.2013.765309
Asongu, S. A., & Nwachukwu, J. C. (2016). Mobile phone penetration, mobile banking and inclusive development in Africa. African Finance Journal, 18(1), 34–52. https://doi.org/10.2139/ssrn.2801263
Aterido, R., Beck, T., & Iacovone, L. (2013). Access to finance in Sub-Saharan Africa: Is there a gender gap? World Development, 47, 102–120. https://doi.org/10.1016/j.worlddev.2013.02.013
Beck, T., & Demirgüç-Kunt, A. (2008). Access to finance: An unfinished agenda. The World Bank Economic Review, 22(3), 383–396. https://doi.org/10.1093/wber/lhn021
Beck, T., Demirguc-Kunt, A., & Martinez Peria, M. S. (2007). Reaching out: Access to and use of banking services across countries. Journal of Financial Economics, 85(1), 234–266. https://doi.org/10.1016/j.jfineco.2006.07.002
Bruhn, M., & Love, I. (2014). The real impact of improved access to finance: Evidence from Mexico. The Journal of Finance, 69(3), 1347–1376. https://doi.org/10.1111/jofi.12091
Brune, L., Giné, X., Goldberg, J., & Yang, D. (2016). Facilitating Savings for Agriculture: Field Experimental Evidence from Malawi. Economic Development and Cultural Change, 64(2), 187–220. https://doi.org/10.1086/684014
Bulman, D., Eden, M., & Nguyen, H. (2014). Transitioning from low-income growth to high-income growth: is there a middle income trap?. The World Bank. https://doi.org/10.1596/1813-9450-7104
Burgess, R., & Pande, R. (2005). Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment. American Economic Review, 95(3), 780–795. https://doi.org/10.1257/0002828054201242
Chauvet, L., & Jacolin, L. (2017). Financial Inclusion, Bank Concentration, and Firm Performance. World Development, 97, 1–13. https://doi.org/10.1016/j.worlddev.2017.03.018
Cole, S., Sampson, T., & Zia, B. (2011). Prices or knowledge? What drives demand for financial services in emerging markets? The Journal of Finance, 66(6), 1933–1967. https://doi.org/10.1111/j.1540-6261.2011.01696.x
Corrado, G., & Corrado, L. (2015). The geography of financial inclusion across Europe during the global crisis. Journal of Economic Geography, 15(5), 1055–1083. https://doi.org/10.1093/jeg/lbu054
Das, K., Gryseels, M., Sudhir, P., & Tan, K. T. (2016). Unlocking Indonesia’s digital opportunity. McKinsey & Company, 1-28.
Demirgüç-Kunt, A., & Klapper, L. (2012). Financial inclusion in Africa. Policy Research Working Paper. The World Bank Development Research Group Finance and Private Sector Development Team, 1–18. https://doi.org/10.1596/1813-9450-6088
Demirguc-Kunt, A., & Klapper, L. (2012). Measuring financial inclusion: The global findex database. The World Bank. https://doi.org/10.1596/1813-9450-6025
Demirguc-Kunt, A., Klapper, L., Singer, D., Ansar, S., & Hess, J. (2018). The Global Findex Database 2017: Measuring financial inclusion and the Fintech revolution. The World Bank. https://doi.org/10.1596/978-1-4648-1259-0
Demirguc-Kunt, A., Klapper, L., Singer, D., & Van Oudheusden, P. (2013). The global findex database. The World Bank.
Dienillah, A. A., & Anggraeni, L. (2018). Impact of Financial Inclusion on Financial Stability based on Income Group Countries. Bulletin of Monetary Economics and Banking, 20(4), 1–14. https://doi.org/10.21098/bemp.v20i4.859
Dupas, P., & Robinson, J. (2013). Savings constraints and microenterprise development: Evidence from a field experiment in Kenya. American Economic Journal: Applied Economics, 5(1), 163–92. https://doi.org/10.21098/bemp.v20i4.859
Financial Inclusion Insights Indonesia (FII), (2018). http://finclusion.org/uploads/file/fii-indonesia-2018-2019-final-report(1).pdf
Fungá?ová, Z., & Weill, L. (2015). Understanding financial inclusion in China. China Economic Review, 34, 196–206. https://doi.org/10.1016/j.chieco.2014.12.004
Ghosh, S., & Vinod, D. (2017). What Constrains Financial Inclusion for Women? Evidence from Indian Micro data. World Development, 92, 60–81. https://doi.org/10.1016/j.worlddev.2016.11.011
Greene, W. H. (2003). Econometric analysis (5th Ed.). Englewood Cliffs, NJ: Prentice Hall.
Grohmann, A., Klühs, T., & Menkhoff, L. (2018). Does financial literacy improve financial inclusion? Cross country evidence. World Development, 111, 84–96. https://doi.org/10.1016/j.worlddev.2018.06.020
Han, R., & Melecky, M. (2013). Financial inclusion for financial stability: Access to bank deposits and the growth of deposits in the global financial crisis. The World Bank. https://doi.org/10.1596/1813-9450-6577
Hanh, T. M. P., Daly, K., & Akhter, S. (2016). Bank efficiency in emerging Asian countries. Research in International Business and Finance, 38, 517–530. https://doi.org/10.1016/j.ribaf.2016.07.012
Kostov, P., Arun, T., & Annim, S. (2015). Access to financial services: The case of the ‘Mzansi’ account in South Africa. Review of Development Finance, 5(1), 34–42. https://doi.org/10.1016/j.rdf.2015.04.001
Llanto, G. (2015). Financial inclusion, education, and regulation in the Philippines. https://doi.org/10.2139/ssrn.2672722
Martínez, C. H., Hidalgo, X. P., & Tuesta, D. (2013). Demand factors that influence financial inclusion in Mexico: Analysis of the barriers based on the ENIF survey. BBVA Bank, BBVA Research Working Paper, 1–19.
Mehrotra, A., & Yetman, J. (2015). Financial inclusion-issues for central banks. BIS Quarterly Review March. Available at SSRN: https://ssrn.com/abstract=2580310
OECD. (2018). Financial inclusion and consumer empowerment in Southeast Asia. OECD.
Ouma, S. A., Odongo, T. M., & Were, M. (2017). Mobile financial services and financial inclusion: Is it a boon for savings mobilization? Review of Development Finance, 7(1), 29–35. https://doi.org/10.1016/j.rdf.2017.01.001
Park, C.-Y., & Mercado, R. (2015). Financial inclusion, poverty, and income inequality in developing Asia. Asian Development Bank Economics Working Paper Series, 426. https://doi.org/10.2139/ssrn.2558936
Potnis, D. D. (2015). Beyond Access to Information: Understanding the Use of Information by Poor Female Mobile Users in Rural India. The Information Society, 31(1), 83–93. https://doi.org/10.1080/01972243.2014.976687
Riwayati, H. E. (2017). Financial Inclusion of Business Players in Mediating the Success of Small and Medium Enterprises in Indonesia. International Journal of Economics and Financial Issues, 7(4), 623–627.
Rosengard, J. K., & Prasetyantoko, A. (2011). If the Banks are Doing So Well, Why Can’t I Get a Loan? Regulatory Constraints to Financial Inclusion in Indonesia. Asian Economic Policy Review, 6(2), 273–296. https://doi.org/10.1111/j.1748-3131.2011.01205.x
Rowntree, O. (2018). GSMA Connected Women–The Mobile Gender Gap Report 2018. Report. GSMA, Cambridge, MA.
Sanjaya, I. M., & Nursechafia, N. (2016). Financial Inclusion And Inclusive Growth: A Cross-Province Analysis In Indonesia. Buletin Ekonomi Moneter Dan Perbankan, 18(3), 281–306. https://doi.org/10.21098/bemp.v18i3.551
Suri, T., & Jack, W. (2016). The Long-Run Poverty and Gender Impacts of Mobile Money. Science, 354 (6317), 1288–92. https://doi.org/10.1126/science.aah5309.
Survey on Financial Inclusion and Access (SOFIA). (2017). https://www.opml.co.uk/projects/survey-financial-inclusion-access-sofia
Swamy, V. (2014). Financial Inclusion, Gender Dimension, and Economic Impact on Poor Households. World Development, 56, 1–15. https://doi.org/10.1016/j.worlddev.2013.10.019
Tambunan, T. T. (2018). MSMEs and Access to Financing in a Developing Economy: The Indonesian Experience. In Financial Entrepreneurship for Economic Growth in Emerging Nations (pp. 148–172). IGI Global. https://doi.org/10.4018/978-1-5225-2700-8.ch008
Wang, X., & Guan, J. (2017). Financial inclusion: Measurement, spatial effects and influencing factors. Applied Economics, 49(18), 1751–1762. https://doi.org/10.1080/00036846.2016.1226488
International Telecommunication Union (ITU), (2018) “World telecommunication/ICT indicators database, “ ITU, Geneva
Yoshino, N., & Morgan, P. (2016). Overview of Financial Inclusion, Regulation, and Education. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2838114
Zins, A., & Weill, L. (2016). The determinants of financial inclusion in Africa. Review of Development Finance, 6(1), 46–57. https://doi.org/10.1016/j.rdf.2016.05.001
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Published
Jun 30, 2020
Article Details
How to Cite
Esquivias, M. A., Sugiharti, L., Jayanti, A. D., Purwono, R., & Sethi, N. (2020). Mobile Technologies, Financial Inclusion, and Inclusive Growth in East Indonesia. Journal of Telecommunications and the Digital Economy, 8(2), 123–145. https://doi.org/10.18080/jtde.v8n2.253
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Telecommunications
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Author Biographies
Miguel Angel Esquivias, Universitas Airlangga
Faculty of Economics and Business, Universitas Airlangga
Lilik Sugiharti, Universitas Airlangga
Department of Economics, Faculty of Economics and Business
Ari Dwi Jayanti, Universitas Airlangga
Faculty of Economics and Business, Universitas Airlangga
Rudi Purwono, Universitas Airlangga
Vice Dean, Faculty of Economics and Business
Narayan Sethi, National Institute of Technology Rourkela
Dept. of Humanities and Social Sciences, National Institute of Technology (NIT) Rourkela
