Does digital finance reduce poverty in Morocco? A propensity score matching approach

Facilitating access to financial services enhances resource mobilization, which stimulates investment and easier consumption. While the rapid growth of digital payment infrastructures in Morocco has occurred, financial exclusion persists, particularly among low-income populations and rural areas, who may lack access to these services. This study uses nationally representative data and propensity score matching to analyze the causal impact of financial inclusion and digital payment usage on income poverty, revealing diverse effects. Moreover, traditional financial inclusion alone results in only minor reductions in the likelihood of poverty. In contrast, digital payment usage among already financially connected individuals reduces poverty by approximately 3.8 to 7.6%, depending on the matching estimator. When considering observable characteristics, digital inclusion shows no strong poverty-reducing effect compared to financial exclusion. These results are further supported by benchmark OLS regressions, which suggest that the poverty reduction is mainly driven by the digital aspect of financial inclusion rather than by financial access itself. Our research recommends prioritizing effective digital usage over simply increasing account ownership within the financial system. Keywords: digital financial inclusion, poverty reduction, propensity score matching, Morocco.