Reproducibility package for Digital Payments and the COVID-19 Shock: The Role of Pre-Existing Conditions in Banking, Infrastructure, Human Capabilities, and Digital Regulation

Treating data collected pre- and post-COVID as a quasi-experiment, this paper examines the importance of presumed enablers and safeguards in driving the observed expansion of digital payments and digital financial inclusion. We interact drivers of digital payments usage with a country-specific proxy of the severity of the Covid shock, leveraging variation in both the drivers and the quasi-treatment (i.e., the COVID shock) to better identify the parameters. While 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. One interpretation is that governments and the private sector were able to overcome underdeveloped banking systems and weak regulation of the digital economy; but only where there was adequate digital infrastructure, connectivity, and a high share of the population that understood and could make use of digital payments.