Banking the unbanked: exploring the impact of internet penetration on accessibility to banking services in developed and developing economies

Abstract

Purpose

The surge in internet usage has generated widespread speculation and optimism regarding its potential impact on the accessibility to financial services. The aim of this study is to investigate the effect of internet penetration on the accessibility of banking services in developed and developing countries.

Design/methodology/approach

Panel data regression methods are used to estimate the impact of internet penetration on accessibility to banking services in a sample of 74 countries from Global Findex survey waves of 2011, 2014, 2017 and 2021. To mitigate potential issues related to heteroscedasticity, autocorrelation and cross-sectional dependence, the study has implemented cluster robust standard errors testing. Furthermore, as a sensitivity check, the sample has been segregated into developed and developing country groups.

Findings

The study finds a significant positive correlation between internet penetration and banking access in full sample. Subsample analysis reveals that this relationship is statistically significant in developed countries, but not in developing ones, despite being positive. The research discusses the implications of these findings for both country groups.

Originality/value

Research to date has largely investigated the link between information and communication technology (ICT) and financial inclusion, often treating internet penetration as one component of ICT, which obscures its individual influence. This study, however, isolates internet penetration to specifically analyze its distinct effects on banking accessibility across developed and developing countries.

Citation

Jain, S. and Sahu, J.P. (2025), "Banking the unbanked: exploring the impact of internet penetration on accessibility to banking services in developed and developing economies", Digital Policy, Regulation and Governance, Vol. 27 No. 1, pp. 94-115. https://doi.org/10.1108/DPRG-02-2024-0021