Who Uses Mobile Payment Apps in Developing Countries? Literacy, Education, and the Role of Trust

Abstract

Financial inclusion is a key developmental objective for many developing countries. It is generally believed that improving education and financial literacy will translate into greater participation rates in digital financial services. Using unique microdata from Indonesia and Bangladesh, our econometric models show that education and literacy are not robustly correlated with greater levels of digital finance usage and that distrust in the financial system sometimes rises with an individual’s education or level of financial knowledge. Together, the results suggest that financial literacy and education may not effectively promote financial inclusion unless undertaken alongside efforts to build trust in financial services.

Keywords: O12, O17