How Greater Digital Inclusion Can Translate into Greater Financial Inclusion
New research shows that digital inclusion – the policy of providing greater access to high-speed internet – plays a key role in gaining greater access to credit, particularly in regions with marginalized and underserved populations.
The research findings are contained in the paper, “Digital Inclusion and Financial Inclusion: Evidence from Peer-to-Peer Lending”, published in the Journal of BusinessEthics. The paper is co-authored by Kiridaran (Giri) Kanagaretnam, Professor of Accounting and the Ron Binns Chair in Financial Reporting, Banking and Governance at Schulich, together with Xiaoran (Jason) Jia, Assistant Professor of Accounting at Laurier University’s Lazaridis School of Business and Economics, and a former PhD student of Professor Kanagaretnam.
“We found robust evidence that digital inclusion – a public policy designed to provide high-speed internet infrastructure for historically digitally excluded populations – is positively associated with the greater access to capital by people from marginalized communities,” said Kanagaretnam.
The study generated a number of additional findings, including the discovery that digital inclusion may contribute to higher lending rates due to the availability of more information about borrowers that assist lenders in their decision-making process, and the strong likelihood that digital inclusion may facilitate faster loan approvals.
The research findings also showed digital inclusion led to higher lending penetration in areas underserved by traditional banks as well as areas with greater minority populations. “These results suggest that digital inclusion plays a key role in financial inclusion, particularly in regions with more vulnerable and/or underserved populations,” noted Kanagaretnam.
Kanagaretnam and Jia thank the CPA Ontario Centre in Digital Accounting Information at the Schulich School of Business for its financial support. Kanagaretnam also thanks the Social Sciences and Humanities Research Council of Canada (SSHRC) for its financial support.
