Cryptocurrency Adoption and Financial Resilience: A Worldwide Fractional Probit Analysis and Institutional Moderation

This article investigates the impact of grassroots cryptocurrency adoption—operationally defined as the intensity of on-chain retail transactions and peer-to-peer (P2P) exchange volumes—on household financial resilience. Utilising aggregate cross-sectional data from 112 countries, we employ a fractional probit regression to account for the bounded nature of our resilience index. The study highlights marked heterogeneity depending on the level of economic development. The results reveal a positive and significant effect in developing countries, whereas a negative association emerges in developed economies. Analysis of the underlying mechanisms indicates a significant moderating role for institutional quality. While cryptocurrency adoption shows a direct positive correlation with financial resilience in emerging markets, its contribution weakens in environments with robust formal institutions. These findings suggest that digital assets primarily function as a substitute for formal financial systems in contexts characterised by institutional voids and limited financial inclusion. Furthermore, the study identifies non-linear relationships between banking penetration and resilience, underscoring the importance of financial system maturity. Overall, the results suggest that cryptocurrency adoption can serve as a functional tool for strengthening worldwide resilience, provided it is supported by targeted regulatory oversight and digital financial education.