Digital Financial Transformation in The Financial Inclusion Program and Its Impact on Income Inequality: The Case of Middle-Income Countries

Abstract

The rise of the financial industry is essential for economic expansion, which includes reducing income disparity. The public will engage in more transactions, investments, savings, and credit if the financial industry is strong. The rise will then boost economic expansion and lessen wealth disparity. In 15 middle-income countries between the years of 2012 and 2019, this study sought to quantify the impact of digital finance, financial inclusion, and financial development on income disparity. The panel data regression with fixed effect model was the analytical method utilized. The findings revealed that although financial development index has a negative and substantial impact on income inequality, the number of fintech startups and commercial bank branches per 100,000 persons had a positive and significant impact on income inequality.