Digitalisation and financial inclusion of lower middle-income ASEAN

Recent studies reasoned that digitalising business processes support financial inclusion, resulting in greater economic activities and growth. Digital financial inclusion is argued to be accessible to some privileged and digitally savvy individuals. However, digitalised financial services do not always guarantee financial inclusion. This study examines how the digitalisation of business processes might instil financial inclusion in lower-middle-income ASEAN economies. Based on the Diffusion of Innovation (DOI) theory, the digitalisation of business processes is modelled by fixed high-speed broadband, mobile and cellular subscriptions as a predictor of financial inclusion. The pooled mean group estimation of the autoregressive distributed lag (ARDL) model is employed to determine the effect of digitalisation on the financial inclusion of Cambodia, Indonesia, Laos, Myanmar, the Philippines and Vietnam economies. The key finding is the significance of digitalisation in inducing the financial inclusion of lower-middle-income ASEAN economies. The digitalisation of business processes significantly affects the accessibility of private businesses to domestic credit provided by their banks.