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A New Economic Perspective: Understanding The Impact Of Digital Financial Inclusion On Indonesian Households Consumption

Author

Listed:
  • Alwahidin N

    (Institut Agama Islam Negeri Kendari)

  • Arlita Jufra

    (Institut Agama Islam Negeri Kendari)

  • Beti Mulu

    (Institut Agama Islam Negeri Kendari)

  • Kiki Novita Sari

    (Institut Agama Islam Negeri Kendari)

Abstract
The fifth wave of the Indonesian Family Life Survey (IFLS), conducted in 2014, is used to compile the cross-sectional data for this study. Information on household consumption on a per-person basis is used. This study investigates how people’s access to digital financial services influences their discretionary spending in Indonesia.We find that household spending increased alongside internet penetration. Our research suggests that low and middle-income families benefit the most from the accessibility to and convenience of digital finance. We conclude that digital banking positively affects consumer spending due to factors such as higher earnings, more opportunities for investment, less friction during financial transactions, higher levels of security, and looser liquidity requirements.

Suggested Citation

  • Alwahidin N & Arlita Jufra & Beti Mulu & Kiki Novita Sari, 2023. "A New Economic Perspective: Understanding The Impact Of Digital Financial Inclusion On Indonesian Households Consumption," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 26(2), pages 333-360, May.
    • Handle: RePEc:idn:journl:v:26:y:2023:i:2f:p:333-360
    DOI: https://doi.org/10.59091/1410-8046.2070
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    References listed on IDEAS

    as
    1. Andrei A. Levchenko, 2005. "Financial Liberalization and Consumption Volatility in Developing Countries," IMF Staff Papers, Palgrave Macmillan, vol. 52(2), pages 237-259, September.
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    4. Christopher D. Carroll & Misuzu Otsuka & Jirka Slacalek, 2006. "How Large Is the Housing Wealth Effect? A New Approach," NBER Working Papers 12746, National Bureau of Economic Research, Inc.
    5. Berger, Allen N, 2003. "The Economic Effects of Technological Progress: Evidence from the Banking Industry," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(2), pages 141-176, April.
    6. Li, Jie & Wu, Yu & Xiao, Jing Jian, 2020. "The impact of digital finance on household consumption: Evidence from China," Economic Modelling, Elsevier, vol. 86(C), pages 317-326.
    7. Sydney Ludvigson, 1999. "Consumption And Credit: A Model Of Time-Varying Liquidity Constraints," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 434-447, August.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Household consumption; Digital financial inclusion; Mediating effect; Indonesian family life survey (IFLS); Internet usage index;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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