Digital Financial Inclusion and the Banking Sector’s Stability during Economic Turbulence: Evidence from Egypt

نوع المستند : المقالة الأصلية

المؤلفون

كلية التجارة، جامعة طنطا

المستخلص

Purpose: The study aims to examine the impact of digital financial inclusion practices on the financial stability of the banking sector in Egypt.
Design/Methodology/ Approach: The study used annual data from a sample of 17 Egyptian banks involved in digital financial inclusion practices over the 2019- 2022 period and annual data about digital financial inclusion indicators from the Central Bank of Egypt. Bank stability is measured using Z-Score, and digital financial inclusion is measured through proxies of the number of mobile money accounts per 1000 adults, mobile money transactions per 1000 adults, and registered mobile money agent outlets per 1000 km2. The panel least square regression method is utilized for empirical analysis.
Findings: The results show that all digital financial inclusion proxies significantly affect the banking sector's stability. However, this impact does not follow a definite direction. The number of mobile money accounts per 1000 adults positively relates to stability, while other indicators have a negative effect. This can be attributed to either the early stages of implementing digital financial inclusion or the impact of the economic conditions. Bank size, loan ratio, and equity ratio significantly affect the bank’s stability.
Originality/Value: The study contributes to Egypt's digital financial inclusion and banking stability literature. Previous literature about the Egyptian context focused on financial inclusion and its implications on various aspects of banking performance. This study is a pioneer in investigating the impact of digital financial inclusion on the banking sector's stability in recent years that witnessed economic turbulence in Egypt.

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