DIGITALIZATION AND ACCESS TO FINANCE IN SUB-SAHARAN AFRICA: THE ROLE OF REGULATORY QUALITY

Digital technology has become the order of daily activities in developing countries including Sub-Saharan Africa. The financial sector has not been left out in the digitalization process, which has been regarded as veritable means of enhancing access to finance in Sub-Saharan Africa. However, this has been hampered by the quality of regulations in the region. Thus, the study examined the nexus between digitalization and access to finance and the role of regulatory quality in Sub-Saharan Africa between 2010 and 2022. The study employed the two-step system Generalized Method of Moments in analyzing the data, and the result found that digitalization is effective in improving access to finance in Sub-Saharan Africa. It also found that poor regulatory quality negatively affect financial access in the region. As a result, when regulatory quality interacted with digitalization in the model, it weakens the effect of digitalization on access to finance. This calls for the SSA countries to strengthen the regulations especially with regard to digitalization and fintech in order to guide against undue transaction by the digital service providers and to guide against bad service providers scamming the customers and denying them access to financial services. Therefore, the study recommends that Sub-Saharan African countries need to strengthen their institutional infrastructures to make them stronger to prevent abuse of digital platform.