Does Financial Technology Affect Income Inequality in Indonesia?

Saraswati, Birgitta Dian; Maski, Ghozali; Kalug, David; Sakti, Rachmad Kresna

doi:10.18502/kss.v4i7.6850

Cited by 5 publications

(6 citation statements)

References 7 publications

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“…Moreover, the results also show that high technology exports have a negative impact on income inequality. These results are in line with the findings of Saraswati, Maski, Kalug, and Sakti (2020), who revealed that sometimes a small group of people contains a larger portion of the national wealth because of the enhanced earnings opportunities through the use of high-quality resources, which they can afford on account of their economic power. However, the facility to export high technology at an affordable price removes inequality in income distribution because it gives equal chances to grow economically at all levels.…”

Section: Discussionsupporting

confidence: 92%

Do Globalization, Technology Adoption and Economic Development Influence Income Inequality in Developing Asian Nations?

Abbas

Hye

Rehan

et al. 2022

AJEER

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Currently, income inequality has become an international issue that needs to be overcome and also requires the attention of researchers and policymakers. Hence, this study is an attempt to explore the impact of globalization, technology adoption, and economic development on income inequality. For this purpose, 20 years of large-scale panel data over the period from 2001 to 2020 for ten emerging Asian nations (Iran, Jordan, Iraq, Laos, Pakistan, Bangladesh, Sri Lanka, Thailand, Indonesia, and the Philippines) is mined from the World Bank database and KOF globalization index. In order to inspect the empirical relationship among the selected variables, the panel data fixed effects model (FEM) along with the robust standard error is employed. The results indicate that globalization, technology adoption, and economic development have a negative linkage with income inequality, which means these factors play a significant role in removing the income inequality in developing countries. This study provides insight for policymakers while developing policies regarding income inequality elimination in the country.

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Section: Discussionsupporting

confidence: 92%

Do Globalization, Technology Adoption and Economic Development Influence Income Inequality in Developing Asian Nations?

Abbas

Hye

Rehan

et al. 2022

AJEER

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“…Our study results demonstrate that the FinTech variable, which is proxied by the usage of mobile phones to pay and receive money (age +15) in the past year, has a positive and significant impact on income inequalities in both the GINI coefficient and the Palma ratio proxies at the 1% and 10% significance levels. Thus, the findings of our study are robust in both proxies of income inequalities and support those of Saraswati et al (2020), who find that FinTech provides more benefit to the rich in Indonesia than the poor and broadens the income inequalities gap. The results are not consistent with the findings of Asongu and Nwachukwu (2018), Asongu and Odhiambo (2019), X.…”

Section: Pooled Ols Regression Analysissupporting

confidence: 85%

“…Moreover, Hodula (2023) investigates the impact of FinTech and big tech credit on income inequalities in a panel data set of 78 countries from 2013-2019 and concludes that FinTech and other big tech developments are linked with a reduction in income inequality. In contrast, Saraswati et al (2020) show that FinTech development increases income inequality in Indonesia using the partial adjustment model from 1990-2017. This may be due to the fact that FinTech by itself requires prerequisite initial investments for its utilization, such as knowledge, smart phones, ICT infrastructure, electricity, and capital.…”

Section: Fintech and Income Inequalitymentioning

confidence: 90%

The Causal Relationship between FinTech, Financial Inclusion, and Income Inequality in African Economies

Girma,

Huseynov

2023

JRFM

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Income inequality is one of the biggest problems affecting developing economies. Market imperfections and information asymmetry lead to lack of access to the financial system, which will exacerbate income inequality. The growing adoption of FinTech (financial technology) has altered the structure of how financial services are delivered and makes these services accessible to underserved groups. This study explores the causal relationship between FinTech development, financial inclusion, and income inequality in a panel study of 29 African countries. We apply pooled OLS regression and structural equation models to samples from the years 2011, 2014, and 2017. The findings indicate that FinTech has a positive and statistically significant effect on financial inclusion and income inequality in African countries. The study results also demonstrate that financial inclusion plays a pivotal mediation role in the negative effect of FinTech on income inequality in African economies. Further, financial inclusion (the ability to create a bank account and borrow money) negatively and significantly affects income inequality in African countries, whereas saving shows a positive and significant impact on income inequality. Overall, our study results suggest that to reduce income inequality and increase the effectiveness of FinTech investments, policymakers in African countries should design proper policies to enhance financial inclusion and offer more accessible and equitable financial services.

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“…Based on the 2019 technological readiness index data by UNCTAD, out of 15 middle-income countries there are seven countries that have an index value of <0.5 which means that they are less prepared to fully utilize fintech in their financial sector. Research findings by [12] show that the development of fintech 3.0 has a positive short-term effect on income inequality in Indonesia. These findings indicate that the development of fintech 3.0 which began in 2000 increased income inequality in Indonesia.…”

Section: Discussionmentioning

confidence: 99%

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

Aisyah,

Pratika

2023

Advances in Social Science, Education and Humanities Research

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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.

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Does Financial Technology Affect Income Inequality in Indonesia?

Abstract: Economic growth is insufficient to be a sole indicator of the population's welfare.

Cited by 5 publications

References 7 publications

Do Globalization, Technology Adoption and Economic Development Influence Income Inequality in Developing Asian Nations?

Do Globalization, Technology Adoption and Economic Development Influence Income Inequality in Developing Asian Nations?

The Causal Relationship between FinTech, Financial Inclusion, and Income Inequality in African Economies

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

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