Title page
Contents
Abstract 4
Résumé 4
1. Introduction 7
2. Conceptual Framework 9
3. Mapping digitalisation trends in the financial sector across countries 11
4. Measuring the ripple effects of financial sector digitalisation 15
Empirical approach 15
The contribution of financial sector digitalisation to productivity growth of downstream industries 17
Disentangling Digital Consumption and Investment in Finance 20
The mediating role of intangible-intensive industries 21
Mechanisms at work 22
5. Policy and structural drivers of digitalisation of the financial sector 24
6. Conclusion 30
References 32
Annex A. Additional Figures 35
Annex B. Additional Results 43
Annex C. Robustness Checks 46
Annex D. Robustness of intangible-intensive results 54
Annex E. Robustness of Mechanisms at work 56
Annex F. Robustness of policy and structural drivers of digitalisation of the financial sector 58
Annex G. Data 59
Table 1. Digitalisation of the financial sector is associated with higher productivity in downstream industries 18
Table 2. Separating the contribution of the consumption and investment components of digitalisation of the financial sector 20
Table 3. Digitalisation of financial sectors is associated with a better credit environment 23
Table 4. Policy and structural drivers of digitalisation of the financial sector 25
Figure 1. Conceptual framework: the relationship between policy, digitalisation of the financial sector and sectoral productivity 11
Figure 2. Digital technology in the financial sector (DTFS) over time 14
Figure 3. Finance as intermediate input across sectors 16
Figure 4. Contribution of digital finance adoption to productivity growth, growth accounting determinants 19
Figure 5. The contribution of financial sector digitalisation to productivity in high and low intangible intensity industries 22
Figure 6. Policies to enhance financial sector digitalisation: the impact on productivity 27
Boxes
Box 1. Policies for Promoting Digitalisation of the Financial Sector 28
Annex Tables
Table B.1. The impact of digitalisation of the financial sector on productivity - All coefficients 43
Table B.2. The impact of digitalisation of the financial sector on productivity - Additional results 44
Table B.3. Contribution of digital finance adoption to productivity growth, growth accounting determinants - Additional results 44
Table B.4. Exploring the complementarity between the consumption and investment components of digitalisation of the financial sector 45
Table C.1. Alternative exposure variable - Using current intermediate consumption observed in sector-country sc of financial services 46
Table C.2. Alternative exposure variable - Using pre-sample intermediate consumption 47
Table C.3. Alternative exposure variable - Using average intermediate consumption observed in sector-country sc of financial services up to year t-1 47
Table C.4. Alternative exposure variable - Using total intermediate consumption rather than total output in Equation (3) 48
Table C.5. Using alternative fixed effects structure - Including sector-year fixed effects 49
Table C.6. Using alternative fixed effects structure - Including country-sector fixed effects 49
Table C.7. Using alternative cluster-levels 50
Table C.8. Alternative samples - Drop one sector at the time 51
Table C.9. Alternative samples - Drop one country at the time 51
Table C.10. Additional finance-related controls 52
Table C.11. Controlling for digital intensity of downstream sectors 53
Table D.1. Digital finance in intangible-intensive sectors 54
Table D.2. Digital finance in tangible intensive sectors 55
Table E.1. Robustness digitalisation and credit environment 56
Table E.2. Robustness digitalisation and credit environment 56
Table E.3. Robustness digitalisation and credit environment 57
Table E.4. Robustness digitalisation and credit environment 57
Table E.5. Robustness digitalisation and credit environment 57
Table F.1. Policy and structural drivers of digitalisation of the financial sector - Robustness 58
Annex Figures
Figure A.1. Percentage points change in digital technology in the financial sector (DTFS) between 2005 and 2018 35
Figure A.2. Trends in financial sector digitalisation - Investment 36
Figure A.3. Trends in financial sector digitalisation - Consumption 37
Figure A.4. Finance as intermediate input across sectors - Distribution across countries 38
Figure A.5. Intensity of Intangible Capital 39
Figure A.6. Growth rates in digitalisation and hours worked across countries 40
Figure A.7. Growth rate in DTFS and financial industry's size in the economy 41
Figure A.8. Initial levels of key policy drivers of digital finance 42