Impact of digital financial inclusion on ASEAN banking stability: Implications for the post-Covid-19 era

Banna, Hasanul and Alam, Md Rabiul (2021) Impact of digital financial inclusion on ASEAN banking stability: Implications for the post-Covid-19 era. Studies In Economics And Finance, 38 (2, SI). pp. 504-523. ISSN 1086-7376, DOI

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Purpose This paper aims to investigate how digital financial inclusion (DFI) can be a potential factor to maintain banking stability in Association of Southeast Asian Nations (ASEAN) countries and whether the relationship could bring a possible implication for the post-Covid-19 pandemic era. Design/methodology/approach Using an unbalanced panel data of 213 banks of 4 ASEAN countries, the study has deployed principal component analysis, ordinary least square, two-step dynamic system generalised method of moments and panel corrected standard errors techniques. Findings The empirical study finds that the full-fledged application of DFI accelerates the ASEAN banking stability which not only decreases the default risk of the banks but also upturns the financial mobility in the region. The results also suggest that ASEAN banks are, with the implementation of DFI, likely to uphold the banking sector stability by reducing liquidity crisis and non-performing loans during and in the post-Covid-19 era. Therefore, accelerating digital finance in ASEAN countries is considered as one of the significant means for the banking sector stability that subsequently leads to economic and financial resilience even in the face of any crises. Originality/value Prevailing studies have mostly investigated the association between financial inclusion and banking stability in different contexts. However, this study is unique to empirically investigate the association between DFI and the ASEAN banking stability.

Item Type: Article
Funders: Faculty of Business and Accountancy, Universiti Malaya, Malaysia [GPF043A-2020]
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HF Commerce > Business
Divisions: Ungku Aziz Centre Development Studies
Depositing User: Ms Zaharah Ramly
Date Deposited: 26 May 2022 03:01
Last Modified: 26 May 2022 03:01

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