Digitalisation of financial services, access to finance and aggregate economic performance

The paper presents novel indicators to measure financial sector digitalisation that cover 21 OECD countries over the 1995-2018 period, showing a significant increase in digital penetration though at different speeds and intensities across countries. The indicators are used to study the impact of financial sector digitalisation on economic activity, highlighting significant positive effects on the productivity of downstream industries. A 10% increase in financial sector digitalisation is associated with a 0.1 percentage point increase in productivity growth for the average industry, with a stronger impact in intangible-intensive industries. Digitalisation in finance is also associated with an easing of credit constraints, particularly benefiting intangible-intensive industries and SMEs, via an improvement in credit allocation and market conditions. Results suggest that policy actions aimed at supporting digital infrastructure, promoting competition in communications, fostering finance innovation, and encouraging high-level skill formation (especially in STEM fields) could sustain and enhance productivity growth through financial sector digitalisation.