Information communication technology and financial inclusion of innovative entrepreneurs

Abstract

Financial inclusion (FI) constitutes an absolute priority for poverty alleviation and information communication technology (ICT) is an essential component of any FI strategy that aims to enable access to a wide range of financial products and services. This study explores entrepreneurs’ assessments of the role of ICT on their FI and its effect in Africa. Using data on 1436 entrepreneurs from the World Bank Enterprise Survey database and applying an inverse probability of treatment weighting (IPTW) based on propensity scores, the results of our study show that ICT increases entrepreneurs’ FI. In particular, we find that average FI of entrepreneurs using ICT in their business is approximately 12% higher than their counterparts who do not use ICT. Further, separate treatments of email, website, and mobile phone, show that business website ownership has the highest impact on FI, followed by mobile phone and email. The results are robust through a series of robustness checks including the bivariate probit model, propensity score matching model, and alternative proxies for FI. Our findings confirm the significant role technological deepening plays in advancing FI in Africa and its potential for a wider applicability to other developing economies.