Epidemic Exposure, Financial Technology, and the Digital Divide

We ask whether epidemic exposure leads to a shift in financial technology usage and who participates in this shift. We exploit a dataset combining Gallup World Polls and Global Findex surveys for some 250,000 individuals in 140 countries, merging them with information on the incidence of epidemics and local 3G internet infrastructure. Epidemic exposure is associated with an increase in remote-access (online/mobile) banking and substitution from bank branch-based to ATM activity. The temporary nature of the effects we identify is more consistent with a demand channel rather than that of supply with high initial fixed costs. Exploring heterogeneity using a machine-learning driven approach, we find that young, high-income earners in full-time employment have the greatest tendency to shift to online/mobile transactions in response to epidemics. Baseline effects are larger for individuals with better ex ante 3G signal coverage, highlighting the role of the digital divide in adaption to new technologies necessitated by adverse external shocks.