Financial Inclusion and Rural Economic Resilience: Evidence from Indonesia’s Digital Payment Expansion
DOI:
https://doi.org/10.61978/moneta.v2i1.821Keywords:
Digital Payments, Rural Development, Financial Inclusion, Structural Break, Economic Resilience, Indonesia, Fintech PolicyAbstract
This study addresses the research gap on how digital financial inclusion, particularly through digital payment systems, shapes rural economic development in Indonesia. Despite rapid national growth of digital transactions, rural adoption lags significantly behind urban areas. The study aims to examine the extent to which digital payments influence rural GDP growth, household consumption, and economic resilience, especially in the post–COVID-19 period. The methodology employed a panel data regression framework with fixed effects and structural break analysis across 33 Indonesian provinces, supported by secondary data from national digital transaction trends, rural digital infrastructure, and post pandemic economic indicators. Supplementary qualitative insights were drawn from international case comparisons. The results show a strong positive correlation between digital payment adoption and regional GDP growth, particularly post 2020 reforms. Rural areas with improved digital infrastructure experienced enhanced financial participation, better household spending behavior, and increased micro enterprise productivity. However, persistent challenges such as limited digital literacy, infrastructural gaps, and regional inequalities hamper the full realization of digital financial benefits. The discussion situates these findings within global best practices (Kenya’s M-Pesa, India’s Digital India), showing that inclusive digital ecosystems require infrastructure, literacy, and regulatory coherence. The study advances the field by demonstrating how digital payment adoption can serve as a catalyst for rural resilience and inclusive development in emerging economies. In conclusion, digital financial inclusion represents a key lever for rural transformation in Indonesia. The integration of accessible, trusted, and scalable digital payment solutions into everyday economic life can promote inclusive growth and mitigate regional disparities.
References
Al-Arsy, A. F., & Afian, A. (2022). Analysis of the Most Widely Used E-Wallet and E-Commerce Portals in Indonesia Based on the Pillars of Digital Economy. https://doi.org/10.11594/nstp.2022.2605 DOI: https://doi.org/10.11594/nstp.2022.2605
Albers, A. N., Wright, E. H. M., Thaker, J., Conway, K., Daley, M. F., & Newcomer, S. R. (2023). Childhood Vaccination Practices and Parental Hesitancy Barriers in Rural and Urban Primary Care Settings. Journal of Community Health, 48(5), 798–809. https://doi.org/10.1007/s10900-023-01226-4 DOI: https://doi.org/10.1007/s10900-023-01226-4
Al‐Saidi, M., & Hussein, H. (2021). The Water-Energy-Food Nexus and COVID-19: Towards a Systematization of Impacts and Responses. The Science of the Total Environment, 779, 146529. https://doi.org/10.1016/j.scitotenv.2021.146529 DOI: https://doi.org/10.1016/j.scitotenv.2021.146529
Anand, S., Sanchayita, S., Pandey, M. K., Suresh, V. V., Gayathri, M., S, M. S., Sahdev, S. L., Chidera, A. G., & Natanael, N. (2024). Cross-Border Collaboration: India’s UPI Success Story in Indonesia (A Case Study on Unified Payments System). International Journal of Accounting & Finance in Asia Pasific, 7(1), 124–139. https://doi.org/10.32535/ijafap.v7i1.2903 DOI: https://doi.org/10.32535/ijafap.v7i1.2903
Andaiyani, S., Asngari, I., & Aini, H. B. (2024). Exploring the Influence of Digital Transformation on Financial Inclusion: Insights From Southeast Asian Economies. Journal of Southeast Asian Studies, 29(2), 1–18. https://doi.org/10.22452/jati.vol29no2.1 DOI: https://doi.org/10.22452/jati.vol29no2.1
Anita, D., & Sentosa, S. U. (2021). Analysis of Determinants of Village-City Migration and Economic Growth Between Provinces in Indonesia. https://doi.org/10.2991/aebmr.k.210616.025 DOI: https://doi.org/10.2991/aebmr.k.210616.025
Arın, K. P., Lacomba, J. A., Lagos, F., Moro‐Egido, A. I., & Thum, M. (2022). Exploring the Hidden Impact of the Covid-19 Pandemic: The Role of Urbanization. Economics & Human Biology, 46, 101119. https://doi.org/10.1016/j.ehb.2022.101119 DOI: https://doi.org/10.1016/j.ehb.2022.101119
Banda, J., Dube, A., Brumfield, S., Amoah, A. S., Crampin, A. C., Reniers, G., & Helleringer, S. (2020). Knowledge, Risk Perceptions and Behaviors Related to the COVID-19 Pandemic in Malawi. https://doi.org/10.1101/2020.06.16.20133322 DOI: https://doi.org/10.1101/2020.06.16.20133322
Brooks, M. M., Mueller, J. T., & Thiede, B. C. (2021). Rural-Urban Differences in the Labor-Force Impacts of COVID-19 in the United States. Socius Sociological Research for a Dynamic World, 7. https://doi.org/10.1177/23780231211022094 DOI: https://doi.org/10.1177/23780231211022094
Cao, S., Yu, N., Yang, W., Wang, Z., & Mi, J. (2020). The Educational Level of Rural Labor, Population Urbanization, and Sustainable Economic Growth in China. Sustainability, 12(12), 4860. https://doi.org/10.3390/su12124860 DOI: https://doi.org/10.3390/su12124860
Christianti, A. (2024). The Impact of Cashless Payment on Economic Growth in Indonesia. Jurnal Aplikasi Bisnis Dan Manajemen. https://doi.org/10.17358/jabm.10.1.151 DOI: https://doi.org/10.17358/jabm.10.1.151
Denslow, S., Wingert, J. R., Hanchate, A., Rote, A., Westreich, D., Sexton, L., Cheng, K., Curtis, J., Jones, W. S., Lanou, A. J., & Halladay, J. R. (2022). Rural-Urban Outcome Differences Associated With COVID-19 Hospitalizations in North Carolina. Plos One, 17(8), e0271755. https://doi.org/10.1371/journal.pone.0271755 DOI: https://doi.org/10.1371/journal.pone.0271755
Dhanraj, N., Kaur, R., Mansur, B., & Gurunathan, K. (2024). Role of Fintech Adoption on Effective Functioning of Financial Institutions: An Empirical Study. https://doi.org/10.52783/jier.v4i1.523 DOI: https://doi.org/10.52783/jier.v4i1.523
Falaiye, T., Elufioye, O. A., Awonuga, K. F., Ibeh, C. V., Olatoye, F. O., & Mhlongo, N. Z. (2024). Financial Inclusion Through Technology: A Review of Trends in Emerging Markets. International Journal of Management & Entrepreneurship Research, 6(2), 368–379. https://doi.org/10.51594/ijmer.v6i2.776 DOI: https://doi.org/10.51594/ijmer.v6i2.776
Greteman, B., Garcia, C., Gryzlak, B., Kahl, A. R., Lutgendorf, S. K., Chrischilles, E. A., & Charlton, M. E. (2022). Rural and Urban Differences in Perceptions, Behaviors, and Health Care Disruptions During the COVID‐19 Pandemic. The Journal of Rural Health, 38(4), 932–944. https://doi.org/10.1111/jrh.12667 DOI: https://doi.org/10.1111/jrh.12667
Imaiso, J. (2023). Comparison of Community Health Between Rural and Urban Areas in View of the Impact of the COVID-19 Pandemic: Global Perspective Through a Literature Review. Health, 15(05), 457–464. https://doi.org/10.4236/health.2023.155030 DOI: https://doi.org/10.4236/health.2023.155030
Ishar, N. I. M., Harun, M. H. M., Hanif, A., Mustapha, N. A., Kusa, R., & Duda, J. (2024). Bibliometric Analysis on Digital Payment Using Lens.org and Vosviewers: A Comparison of Research Between Malaysia and Poland. Open Research Europe, 4, 191. https://doi.org/10.12688/openreseurope.18248.1 DOI: https://doi.org/10.12688/openreseurope.18248.1
Johnson, K. M., & Lichter, D. T. (2019). Rural Depopulation: Growth and Decline Processes Over the Past Century. Rural Sociology, 84(1), 3–27. https://doi.org/10.1111/ruso.12266 DOI: https://doi.org/10.1111/ruso.12266
Khoifin, K., & Achyar, D. H. (2023). Magining an Inclusive Economy: The Role of SMEs and Digital Payment in Elevating Economic Equality. https://doi.org/10.56506/oprx8346 DOI: https://doi.org/10.56506/OPRX8346
Klapper, L. (2023). How Digital Payments Can Benefit Entrepreneurs. Iza World of Labor. https://doi.org/10.15185/izawol.396.v2 DOI: https://doi.org/10.15185/izawol.396.v2
Korobeynikova, O., Korobeynikov, D., & Popova, L. (2018). Problem Solving Payment Innovations in the Digital Economy. https://doi.org/10.2991/cssdre-18.2018.7 DOI: https://doi.org/10.2991/cssdre-18.2018.7
Lavesson, N. (2016). When and How Does Commuting to Cities Influence Rural Employment Growth? Journal of Regional Science, 57(4), 631–654. https://doi.org/10.1111/jors.12324 DOI: https://doi.org/10.1111/jors.12324
Li, Y., & Peng, J. (2023). Digital Financial Inclusion and Welfare: Effect, Mechanism and Imbalance. Plos One, 18(12), e0278956. https://doi.org/10.1371/journal.pone.0278956 DOI: https://doi.org/10.1371/journal.pone.0278956
Liu, C., Zhang, L., Ahmed, F., Shahid, M., Wang, X., Wang, Y., Wang, J., & Guo, J. (2021). Family Care, Economic Stress, and Depressive Symptoms Among Chinese Adults During the COVID-19 Outbreak: Difference by Urban and Rural Areas. Frontiers in Psychiatry, 12. https://doi.org/10.3389/fpsyt.2021.700493 DOI: https://doi.org/10.3389/fpsyt.2021.700493
Metri, D. P. (2024). Advancing Msmes Through Global Integration and Cross-Border Connectivity: Opportunities for Qris-Based Payment Code Development. Edunity Kajian Ilmu Sosial Dan Pendidikan, 3(1), 113–125. https://doi.org/10.57096/edunity.v3i1.221 DOI: https://doi.org/10.57096/edunity.v3i1.221
Mueller, J. T., McConnell, K., Burow, P. B., Pofahl, K., Merdjanoff, A. A., & Farrell, J. (2020). Impacts of the COVID-19 Pandemic on Rural America. Proceedings of the National Academy of Sciences, 118(1). https://doi.org/10.1073/pnas.2019378118 DOI: https://doi.org/10.1073/pnas.2019378118
Musyaffi, A. M., Gurendrawati, E., Afriadi, B., Oli, M. C., Widawati, Y., & Oktavia, R. (2022). Resistance of Traditional SMEs in Using Digital Payments: Development of Innovation Resistance Theory. Human Behavior and Emerging Technologies, 2022, 1–10. https://doi.org/10.1155/2022/7538042 DOI: https://doi.org/10.1155/2022/7538042
Najib, M., & Fahma, F. (2020). Investigating the Adoption of Digital Payment System Through an Extended Technology Acceptance Model: An Insight From the Indonesian Small and Medium Enterprises. International Journal on Advanced Science Engineering and Information Technology, 10(4), 1702–1708. https://doi.org/10.18517/ijaseit.10.4.11616 DOI: https://doi.org/10.18517/ijaseit.10.4.11616
Nasution, S. R., Lubis, L. A., & Achmad, N. (2024). Extension Communication Competence and Counseling Intensity on the Quality of Family Planning Extension Services in an Effort to Reduce Stunting in North Padang Lawas Regency. International Journal of Social Service and Research, 4(6). https://doi.org/10.46799/ijssr.v4i6.813 DOI: https://doi.org/10.46799/ijssr.v4i6.813
Ozili, P. K. (2024). Dangers of Digital-Only Financial Inclusion. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4691342 DOI: https://doi.org/10.2139/ssrn.4691342
Pasupuleti, M. K. (2024). Empowering the Global Economy: Digital Currencies and Financial Inclusion for Equitable Growth. 90–105. https://doi.org/10.62311/nesx/17991 DOI: https://doi.org/10.62311/nesx/17991
Pradipta, Y., Abdullah, A., & Suhendi, S. (2023). Seizing Opportunities: The Race Toward Digital Banking in ASEAN. 343–353. https://doi.org/10.2991/978-94-6463-144-9_34 DOI: https://doi.org/10.2991/978-94-6463-144-9_34
Pusaksrikit, T., & Assarut, N. (2023). Exploring COVID-19 Anxiety, Resilience, and Consumer Lifestyles of Rural and Urban Thai Consumers. Kasetsart Journal of Social Sciences, 44(4). https://doi.org/10.34044/j.kjss.2023.44.4.01 DOI: https://doi.org/10.34044/j.kjss.2023.44.4.01
Putrevu, J., & Mertzanis, C. (2023). The Adoption of Digital Payments in Emerging Economies: Challenges and Policy Responses. Digital Policy Regulation and Governance, 26(5), 476–500. https://doi.org/10.1108/dprg-06-2023-0077 DOI: https://doi.org/10.1108/DPRG-06-2023-0077
Rabbani, M., Wijaya, J. D., Kusuma, R. S., Purba, W. B. P., & Tajib, R. M. (2023). Digital Payments in Indonesia: Understanding the Effect of Application Security on User Trust. Indonesian Journal of Computer Science, 12(5). https://doi.org/10.33022/ijcs.v12i5.3426 DOI: https://doi.org/10.33022/ijcs.v12i5.3426
Rasoolimanesh, S. M., Roldán, J. L., Jaafar, M., & Ramayah, T. (2016). Factors Influencing Residents’ Perceptions Toward Tourism Development: Differences Across Rural and Urban World Heritage Sites. Journal of Travel Research, 56(6), 760–775. https://doi.org/10.1177/0047287516662354 DOI: https://doi.org/10.1177/0047287516662354
Sinaga, K. A. S., Irene, J., & Christanti, R. (2023). Digital Adoption and Financial Performance: Evidence From Indonesian SMES in Food and Beverage Sector. Return Study of Management Economic and Bussines, 2(04), 423–435. https://doi.org/10.57096/return.v3i04.94 DOI: https://doi.org/10.57096/return.v3i04.94
Stan, M.-I. (2022). The Impact of the Pandemic Crisis on Employment in the Context of Urbanization. Technium Social Sciences Journal, 33, 492–505. https://doi.org/10.47577/tssj.v33i1.6977 DOI: https://doi.org/10.47577/tssj.v33i1.6977
Sudan, F. K. (2023). Leveraging Green Bonds to Address Debt Sustainability and Economic Recovery in South Asia: Lessons From EU and ASEAN Countries. Regional Economic Development Research, 101–120. https://doi.org/10.37256/redr.4220233543 DOI: https://doi.org/10.37256/redr.4220233543
Wang, Q., & Yu, H.-H. (2024). A Study on the Impact of Digital Financial Inclusion on Inclusive Growth in China: The Mediating Effect of Innovation. International Journal of Innovative Research and Scientific Studies, 7(3), 1030–1042. https://doi.org/10.53894/ijirss.v7i3.3040 DOI: https://doi.org/10.53894/ijirss.v7i3.3040
Wijaya, H. B., & Buchori, I. (2022). Reclassification of Urban Growth in Rural Area, Temanggung Regency, Indonesia. Geoplanning Journal of Geomatics and Planning, 9(1), 1–16. https://doi.org/10.14710/geoplanning.9.1.1-16 DOI: https://doi.org/10.14710/geoplanning.9.1.1-16
Yang, L., & Zhang, Y. (2020). Digital Financial Inclusion and Sustainable Growth of Small and Micro Enterprises—Evidence Based on China’s New Third Board Market Listed Companies. Sustainability, 12(9), 3733. https://doi.org/10.3390/su12093733 DOI: https://doi.org/10.3390/su12093733
Ye, J., Wenhua, X., & Hu, L. (2023). Digital Inclusive Finance, Consumption Structure Upgrading and Carbon Emissions. Frontiers in Environmental Science, 11. https://doi.org/10.3389/fenvs.2023.1282784 DOI: https://doi.org/10.3389/fenvs.2023.1282784
Yucha, N., Setiawan, S., Muttaqiin, N., Ekasari, R., & Mauladi, K. F. (2020). Digital Payment System Analysis of Buying Decision in Indonesia. Journal of Asian Finance Economics and Business, 7(10), 323–328. https://doi.org/10.13106/jafeb.2020.vol7.n10.323 DOI: https://doi.org/10.13106/jafeb.2020.vol7.n10.323
Ženka, J., Pavlík, A., & Slach, O. (2017). Resilience of Metropolitan, Urban and Rural Regions: A Central European Perspective. Geoscape, 11(1), 25–40. https://doi.org/10.1515/geosc-2017-0003 DOI: https://doi.org/10.1515/geosc-2017-0003
Zheng, S., Sheng, B., Ghafoor, A., Ashraf, A. A., & Qamri, G. M. (2023). Investigating the Environmental Externalities of Digital Financial Inclusion and the COVID-19 Pandemic: An Environmental Sustainability Perspective. Environmental Science and Pollution Research, 30(33), 80758–80767. https://doi.org/10.1007/s11356-023-27433-z DOI: https://doi.org/10.1007/s11356-023-27433-z
