Epidemic Exposure, Fintech Adoption, and the Digital Divide
We ask whether epidemic exposure leads to a shift in financial technology usage within and across countries and if so 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-based activity. Using a machine-learning algorithm, we show that heterogeneity in this response centers on the age, income and employment of respondents. Young, high-income earners in full-time employment have the greatest propensity to shift to online/mobile transactions in response to epidemics. These effects are larger for individuals in subnational regions with better ex ante 3G signal coverage, highlighting
the role of the digital divide in adaption to new technologies necessitated by adverse external shocks.
All authors contributed equally to this manuscript and the order of author names is randomized via AEA Randomization Tool (code: AuWT141_jCPw). Saka is an Assistant Professor at the University of Sussex, Visiting Fellow at the London School of Economics, Research Associate at the STICERD & Systemic Risk Centre and Research Affiiate at CESifo. Eichengreen is a Professor of Economics and Political Science at the University of California, Berkeley, Research Associate at the National Bureau of Economic Research and Research Fellow at the Centre for Economic Policy Research. Aksoy is a Principal Economist at the European Bank for Reconstruction and Development (EBRD), Assistant Professor of Economics at King's College London and Research Associate at IZA Institute of Labour Economics. We are grateful to seminar participants at Webinar series in Finance and Development (WEFIDEV) and 2nd LTI@UniTO/Bank of Italy Conference on "Long-Term Investors' Trends: Theory and Practice" as well as Carol Alexander, Ralph De Haas, Jonathan Fu, Thomas Lambert, Xiang Li and Enrico Sette (discussant) for their useful comments and suggestions. Leon Bost, Franco Malpassi, and Pablo Zarate provided outstanding research assistance. Views presented are those of the authors and not necessarily those of the EBRD. All interpretations, errors, and omissions are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.