Poverty Alleviation through Digital and Traditional Finance: Empirical Evidence from Emerging European Economies

Abstract This study examines the relationship between digital and traditional finance-related poverty reduction, including the moderating role of EU membership in 18 countries (2004–2021) by using panel data regression models. The findings indicate that the dominant method of poverty reduction through banking institutions remain traditional financial inclusion instruments, such as bank accounts and bank branches, while digital financial channels have not yet fully realized their potential. European Union membership has generated different poverty and inclusion outcomes as it has strengthened traditional banking while impacting digital financial access. The study provides valuable insights for policy interventions, showing how traditional banking structures and digital financial solutions might play vital roles in addressing different levels of poverty. The expansion of financial access requires an improved internet banking infrastructure, especially in EU candidate countries, as well as methods of tackling e-commerce adoption barriers that benefit disadvantaged populations through digital trade.