DIGITAL FINANCIAL TRANSFORMATION IN THE FINANCIAL INCLUSION PROGRAM AND ITS IMPACT ON INCOME INEQUALITY: THE CASE OF MIDDLE-INCOME COUNTRIES Siti Aisyah, Tika Pratika
Universitas Muhammadiyah Surakarta
Abstract
Development of the financial sector has a role in economic growth, including addressing income inequality. Good financial sector will increase the number of transactions, investments, savings, and credit by the public. This increase will help the process of economic growth and reduce income inequality. This study aims to estimate the impact of digital finance, financial inclusion, and financial development on income inequality in 15 middle-income countries. The results showed that the number of fintech companies and the number of commercial bank branches per 100,000 adults have a positive and significant effect on income inequality, while financial development index has negative and significant effect on income inequality, and the number of the Automatic Teller Machines (ATMs) per 100,000 adults and the number of deposit accounts per 1,000 adults has no effect on income inequality in the selected middle-income countries.
Keywords: inequality, digital finance, financial inclusion, panel data, Fixed Effects Model
