FINANCIAL TECHNOLOGY AND SAVINGS IN THE ECONOMIES WITH DIFFERENT INCOME LEVELS
Abstract
In this article, the relationship between aggregate savings (in percent of GDP) and several indicators of financial technologies (fintech) in the banking sector is explored across three groups of countries: (i) industrial and (ii) developing ones, as well as (iii) the former Soviet Union (FSU) republics. As fintech had been given a strong impulse in the wake of the 2008–2009 world financial crisis, which was caused to large extent by insufficient savings in the USA, it is of interest to study whether fintech developments have a potential to boost domestic savings (in percent of GDP) across countries with a different level of income per capita. Based on the World Bank’s Findex database, it is found with the panel fixed effects (FE) estimates that the fintech effects on savings are quite heterogeneous across group of countries, as well as across specific features of the fintech users. Regardless of income level, account ownership for mobile banking (e-banking) contributes positively to savings in industrial countries, while in developing countries there is a negative impact of e-banking among users with lower income, while in the FSU countries the same negative effect is observed among users with higher income. Labour market status is related to savings in the developing countries only, with a pro-saving effect of unemployed persons. A higher educational level of the e-banking users contributes to the saving rate in the FSU countries, while causality is just the opposite for industrial countries. For the developing countries, savings are decreased by e-banking users with basic education, a finding that is in line with the same negative effect on savings by low-income users. Mobile banking payments (e-payments) of unemployed users decrease savings in the industrial countries, while being of the opposite effect on savings in the developing countries. Users with a higher educational level seems to save more in the industrial countries and the FSU countries. If not account for other features of the fintech users, both male and female ones are distinguished with lower savings in the FSU countries. Finally, dynamics of GDP abroad has a robust favourable impact on the saving rate only in the developing countries.
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