Why do farmers need digital financial inclusion: bank infrastructure, human capital, and multidimensional energy poverty in Indonesia

Against the persistent burden of energy deprivation in agrarian communities, this study examines whether and under what conditions digital financial inclusion alleviates multidimensional energy poverty in Indonesia. Using nationally representative data from the National Socioeconomic Survey (SUSENAS) linked to village-level financial infrastructure data from the Village Potential Survey (PODES), the study constructs a multidimensional energy poverty index capturing access to clean cooking, electricity adequacy and energy-enabled assets. Probit and instrumented bivariate probit models are employed to account for potential endogeneity in digital financial inclusion by exploiting regional variation in availability of formal banking Institutions. The findings show that digital financial inclusion significantly reduces the likelihood of multidimensional energy poverty, with stronger effects among agricultural households. Moreover, the poverty-reducing impact is moderated by household human capital, indicating that digital finance is more effective where capability levels are higher. Overall, the study provides new household-level evidence on how digital financial inclusion can facilitate a more inclusive energy transition in agrarian communities across diverse regional and socioeconomic within the country as a whole.