Improving Digital Literacy and Financial Inclusion of Female Micro-Entrepreneurs through Microcredit: An Exploratory Study

Evaluations of microfinance interventions show significant heterogeneity of impact depending on program design and key characteristics of clients. With the emerging digital financial services (DFS) sector in Indonesia, there is an opportunity to transition microcredit products into digital lending. However, limited evidence shows contradictory results. In Indonesia, the DFS ecosystem significantly expanded, especially e-money services. Despite the rise in DFS and the potential benefits for micro-entrepreneurs, the adoption level is very low. Although some of the barriers to adoption are rooted in rational optimization, others may be informational (i.e., lack of knowledge of potential benefits or how much the DFS environment has evolved) or behavioral (e.g., fear of adoption). This research will be conducted with a microfinance institution (MFI) that provides ultra-micro loans to female entrepreneurs. The research team will work closely with the MFI on their current effort to digitize loan disbursement and encourage its ultra-micro female entrepreneurs to participate in the digital economy.