Digital Payments and the COVID-19 Shock: The Role of Preexisting Conditions in Banking, Infrastructure, Human Capabilities, and Digital Regulation

This paper investigates how the use of digital payments and financial services expanded during and after COVID-19. Treating the situation as a quasi-experiment, the study explores the factors that contributed to this expansion. The analysis looks at the impact of various factors, such as regulations, on digital payment usage, considering the severity of the COVID-19 shock in different countries.

The findings in this publication suggest that although regulation of banks and digital economic activity were correlated with digital payments before and during the pandemic, the capabilities of users and connectivity (to electricity, the internet, and mobile telephony) were responsible for increased use of digital financial services in response to the shock.