Empowering Women through Digital Financial Inclusion: Comparative Study before and after COVID-19

Abstract

The COVID-19 crisis seems to have disproportionately impacted women’s financial resilience. In fact, women’s economic involvement in the financial sector remains unequal. This study compares the impact of digital financial inclusion on women’s economic empowerment before and after the COVID-19 epidemic in Saudi Arabia. Using data collected from the Global Financial Inclusion Database for 2017 and 2021 and ordered probit models, the paper examines the relationship between economic women’s empowerment and digital financial inclusion. Findings indicate that using digital financial services has become more crucial since the pandemic. The results demonstrate that women now play a more significant economic role in decision-making than they did before the epidemic because they have access to a variety of digital financial services that could affect their choices and decisions. The findings are consistent with a number of previous studies, which found that financial digitization is a significant factor in women’s economic empowerment. The distinctiveness of this study is that it provides a recent assessment of Saudi women’s present financial circumstances and assesses current Saudi government initiatives to enhance women’s economic empowerment and leadership capabilities. The research conclusions provide insights for regulators and implications for future research in promoting digital financial inclusion and ensuring Saudi women’s economic empowerment.

1. Introduction

In the post-COVID-19 era, it is imperative that responsible and sustainable business dynamics change, and transformational leaders are the key to assuring corporate creativeness and a bright future for digital businesses around the world [1].

Digital financial services are supporting financial inclusion, gender equality, and inclusive growth [2]. Financial inclusion may be crucial in reducing income inequality and raising personal revenues [3]. Extensive platforms for effective mobile money services have enabled the disadvantaged to obtain basic and customized financial services at a low cost, raising their standard of living [4].

Fintech, or digital financial technology, enables individuals who are not part of the conventional financial system to access financial services. Furthermore, it is a key policy tool for achieving the UN Sustainable Development Goals (SDGs), including gender equality and digital financial inclusion (SDG 5) [5]. Access to digital financial services allows poor or low-income women autonomy and protection. Despite the fact that these services have increased the number of female users in the formal financial system, they also perpetuate structural gender differences that lead to financial exclusion and new vulnerabilities, particularly for women at the bottom of the global income distribution. The current research investigates the advantages of electronic financial facilities for women in terms of accessibility, security, and autonomy.

People who have financial services at their disposal are much more likely to experience improved job outcomes, accumulate more wealth, and start their own businesses [6,7,8]. Despite this, women continue to have lower rates of bank account ownership and they are less likely to handle family budgets and to trade stocks than men [9,10]. According to Demirguc-Kunt et al. [11], and Breza et al. [12], new financial technology, or fintech, is expected to promote financial inclusion and reduce the gender gap in access to financial services. Both traditional financial institutions and new fintech companies promise to deliver new products that are better targeted to clients’ demands at a lower price by utilizing new technologies and non-traditional services [5,13,14,15]. Disadvantaged groups may gain disproportionately from these technological advancements [16,17,18,19].

To our knowledge, there is limited proof that digital financial inclusion reduces the gender gap in financial service digital accessibility and usage, especially in Arab countries. Our study contributes to the existing literature by focusing on how financial technology affects the gender access gap to financial services. It highlights the importance of digital financial inclusion in empowering Saudi women.

Women’s financial inclusion is crucial for achieving gender equality. According to Aker et al. [20], and Ashraf et al. [21], financial inclusion empowers women and offers them more financial authority. It ultimately could have a positive impact on a family’s entire home. In addition, agency banking and other digital financial services made available through mobile phone platforms let women conduct transactions easily and safely from their own homes, companies, and communities. Despite the substantial advantages, there are still considerable challenges that need to be overcome before more women throughout the world may access digital financial services.

This paper outlines the obstacles that must be overcome in order to improve Saudi women’s access to digital banking and finance. There are several reasons why study exploring is important. First, in light of the research of Lusardi and Mitchell [22], Hasler and Lusardi [23], Philippon [13], Gonçalves and Ponchio [24], and Thomas and Gupta [25], the study makes a significant contribution to the body of knowledge and practice, particularly for Arab women. The article sheds light on the rationale behind three financial inclusion pillars and illustrates how each pillar involved incorporates and tends to reduce the problem of women’s financial exclusion and social–economic vulnerability. The novelty of this study is to provide a new approach to assess current public policy initiatives made by the Saudi government to enhance women’s financial empowerment and management capabilities so they can actively participate in the socio-economic growth of the Kingdom as planned in Vision 2030. By concentrating on two understudied paths to financial inclusion and women’s empowerment, the article offers new insight into the fields of economics and social policy. The aim is to comprehend how such investigation manifests in the strategies and practices of social actors, as well as the implications of these for both possibilities and obstacles of successful women’s inclusion. Second, the study is based on a newly original database published by the World Bank on the digital inclusion of Saudi women. To the best of our knowledge, this article is the first to investigate these micro-resources in Saudi Arabia.

The rest of the paper is structured as follows. Section 2 presents the literature review and hypothesis development. Section 3 describes the data and methodology approach. Section 4 summarizes several stylized facts, followed by the results and discussion in Section 5. Section 6 concludes the paper and makes considered implications, recommendations, and future research suggestions.

2. Literature Review and Hypothesis Development

Different theories have highlighted the importance of financial inclusion as a driver of economic growth [26,27], as well as a way to reduce poverty and promote socio-economic equality [28,29]. Most research incorporates or updates the ideas that try to explain the drivers behind financial inclusion. These theories include the technology acceptance model [30], the theory of planned behavior [31], and the innovation diffusion theory [32].

A number of traditional banking services indicators, including the number of bank branches and automated teller machines, loan and account deposits, and the procedures and costs for opening and keeping a bank account, were the main focus of earlier studies on the factors that determine financial inclusion [33]. This was mostly due to the limited improvements in financial technologies and the scarcity of microdata on several alternative variables. However, as financial technologies (such as mobile banking, mobile insurance, and mobile money) proliferated, new research projects were available thanks to the availability of rich and easily accessible data sets [34].

The lack of research papers investigating the impact of the recent pandemic on improving the inclusiveness of the financial sector in the Arab region makes this research crucial. The study significantly adds to the body of knowledge and practice, especially for Arab women, in light of the research of Lusardi and Mitchell [22], Hasler and Lusardi [23], Philippon [13], Gonçalves and Ponchio [24], and Thomas and Gupta [25]. It offers a framework for understanding how financial inclusion enables Saudi women to become more economically independent and self-reliant. In order to improve women’s financial empowerment and management skills so they may actively contribute to the socio-economic progress of the Kingdom as envisaged by Vision 2030, this study offers a fresh approach to evaluating current public policy measures undertaken by the Saudi government after the recent pandemic.

2.1. Digital Financial Inclusion before and after the Pandemic

The need for digitalization is greater than ever because of the coronavirus epidemic 2019 outbreak [35,36]. When the pandemic spread and lockdowns were imposed, millions of individuals used internet-enabled digital platforms to purchase goods, get credits, connect with families and friends, and receive education and health services. Furthermore, a significant challenge is being faced by countries. It is unlikely that economies will return to “pre-COVID” models. The potential of digital technologies has been made clearer by the crisis. In addition, the future will see a greater reliance on technology for many of our daily activities, including work, education, health, public services, and even social interactions [37]. Digital payments could improve people’s access to financial services. The COVID-19 worldwide health crisis and government responses, such as the lockdowns that restricted economic activity, raised the demand for noncontact financial goods and services, accelerating the switch to numerical banking in various countries [38]. Consumers increasingly use phones and cards to make payments to retailers, while governments employed digital payments to reach out to marginalized people.

The COVID-19 issue has created both difficulties as well as possibilities in the financial sector, as lockdowns and social distancing policies have an effect on credit institution operations and customer behavior. On one side, consumers struggled to pay bank loans owing to decreased incomes and incapacity to travel, while on the other side, electronic payment was preferred to cash payments. As a result, COVID-19 accelerated the development of financial inclusion digitalization [39]. According to Shafeeq and Beg [40], COVID-19 has concluded to be neutral; however, they predict that digital financial services are expected to increase, which in turn will have a positive impact on digital financial inclusion in the future.

Regulating the use of digital financial services during COVID-19 was another issue. The pandemic demonstrates these promising improvements in digital payment, but it also emphasizes how unequal these services are to access, particularly to vulnerable groups. Risks associated with consumer protection and financial capacity are just two examples of those associated with the implementation of digital banking finance. Alarifi and Husain [41] conducted comparative research to evaluate the e-service quality before and during the COVID-19 epidemic. Their findings demonstrated that competency is a key factor in customer satisfaction with KSA banks. There are discrepancies between the impact of COVID-19 on e-banking services before and after the pandemic.

The COVID-19 outbreak fundamentally altered the financial technology industry. The development of mobile money, fintech services, and internet banking can have a significant positive impact on low-income households and small businesses. The COVID-19 epidemic has accelerated digitization and raised questions about the viability of digital financial inclusion as a strategy for reducing adverse economic effects and boosting household and company resilience. Digital technology adoption sped up at the same time, resulting in the quick growth of online payment, online marketing, and fintech industries. By implementing digital technologies, several economic entities saw possibilities to reduce the negative economic effects of the current crisis. The results of Daqar et al. [42] demonstrate that by avoiding the use of physical payment methods, inclusive finance perception and behavior among digital payment users are impacted by the spread of COVID-19.

Based on the findings above, the first hypothesis is formulated as follows:

Hypothesis 1 (H1).

The digital financial inclusion is improved after the COVID-19 pandemic.

2.2. Digital Financial Inclusion and Women’s Economic Empowerment

Women’s economic involvement is still unequal in both developed and developing nations, and the COVID-19 crisis is judged to have exerted a disproportionately negative impact on them. To help women’s financial resilience as they are affected by and recover from COVID-19 and the associated economic issues, priority for women should be recognized in policy and strategic measures [43]. Haq et al. [44] argue that strategies have to be implemented to develop the skills and knowledge in the majority of relevant business administration fields to allow the inclusion of women. This will motivate women to make better decisions than expected and grow respectable businesses. Haq et al. [45] promote the discussion of increasing women’s empowerment by creating new employment opportunities that give women greater prospects, particularly in rural areas, which are the most underserved region in emerging economies.

Enhancing women’s economic inclusion is essential because women experience poverty at higher rates than men do as a result of unfair labor allocation and lack of control over economic resources. Women in developing nations who are still dependent on their husbands for major purchases also feel powerless over household finances. To overcome barriers to women’s financial inclusion in the digital world, a range of solutions may be taken into consideration, depending on the country’s cultural environment, infrastructure, and resources. Three main types of obstacles that prevent women and girls from using financial services are identified: a lack of access to the essentials for financial inclusion, a lack of a powerful digital financial infrastructure, and unfavorable rules and regulations. Kulkarni and Ghosh [46] determine the main obstacles affecting women’s accessibility to digital financial services. Their findings show that digitalization enhances women’s social and financial autonomy. Research by Elzahi Saaid Ali [47] looks at how to use relevant Islamic financial services and products to empower Muslim women in Comoros. Covering three focus groups with data from a survey, his findings underline the need of addressing the barriers that prevent Comorian women from accessing Islamic banking services. Furthermore, his findings indicate that women are either unable to access financial services due to a lack of funds or because they are ignorant of the information that would enable them to do so.

Several researchers demonstrate that reducing the gender gap in digital financial inclusion could have good consequences on regulating consumption, reducing financial risks and costs, offering security, raising saving and investment rates, and creating new business opportunities. In addition to launching businesses, women can promote growth by managing their finances more wisely. Access to and use of a variety of financial services improves not only how much women and women-led businesses contribute to growth, but also how autonomous women are, allows them to make better use of their own and their family’s resources, and diminishes the vulnerability of their homes and businesses. Ojo [48] demonstrates that digital financial inclusion boosts women’s economic empowerment in four African countries: Ghana, Kenya, Namibia, and Lesotho. He concludes that applying gender fairness in the digital environment is important to smooth the way for the future and attain sustainable development in the long run. These findings are confirmed by Kim [49]. The author uses data covering eight areas of Nairobi to show that empowered women practice a higher degree of financial independence after using digital banking services. A comparative study by Corrêa [50] concluded that fintech’s do hold the possibility to reinforce women’s financial inclusion. Financial inclusion can help to reduce income inequality, women’s participation in the non-financial system, in particular, reducing the inequality gap, allowing for more inclusive development, which improves both economic and social well-being [51,52].

Furthermore, in order to determine whether financial inclusion supports women’s economic empowerment, Jedi [53] tests this relationship through a descriptive analysis approach and examines the study’s variables, including financial inclusion (possessing a bank account, a credit card, saving with an authorized financial institution, borrowing from an authorized financial institution, borrowing from family or friends, receiving income from both the public and/or private sectors) as an independent variable and its link to economic empowerment as measured by the women proportion. According to the study, there is a substantial association between financial inclusion and women’s empowerment in Iraq. After COVID-19, women embraced technology far more swiftly. COVID-19 influenced the use of technology, which impacted women’s work life and income [54].

The second hypothesis that will be investigated in this paper can be formulated as follows:

Hypothesis 2 (H2).

Digital financial inclusion positively impacts women’s economic empowerment.

3. Stylized Facts

Financial inclusion refers to the accessibility to both persons and companies of valuable and reasonable financial goods and services, including payments, transactions, savings, credit, and insurance, that are provided in a sustainable and ethical way. Seven of the 17 Sustainable Development Goals are driven, in part, by financial inclusion. More specifically, digital financial inclusion entails the use of cost-effective saving technological channels to provide a variety of formal financial services to populations that are currently underserved and financially excluded at a cost that is affordable for users and sustainable for providers.

The 2030 Agenda for Sustainable Development and the Sustainable Development Goals, specifically Goal 5 on achieving gender equality and Goal 8 on promoting full and productive employment and decent work for all, as well as Goal 1 on ending poverty, Goal 2 on ensuring food security, Goal 3 on ensuring health, and Goal 10 on addressing disparities, are all dependent on women’s economic empowerment and having to close gender difference in the corporate world.

The concept of financial inclusion may seem obscure, but it has very real meaning for the 1.2 billion people who, since 2011, have been able to open a bank account. As a matter of fact, the global account ownership percentage increased from 51 percent to 76 percent between 2011 and 2021 [55]. Saudi Arabia has followed this global trend, with Saudi account ownership increasing from 46.42 percent to 74.32 percent between 2011 and 2021 (Figure 1).

In recent years, the proportion of account holders using digital payments has rapidly increased across all countries. However, a clear gap remains between high-income economies and developing economies. In high-income economies, the share of account owners using digital payments rose from 88 percent to 95 percent during the period 2014–2021 (see

Table 1. Share of account owners using digital payments.

2014		2017		2021
High-Income Economies	Developing Economies	High-Income Economies	Developing Economies	High-Income Economies	Developing Economies
88%	35%	90%	44%	95%	57%

Source: Authors’ presentation using the Global Findex database (last access date 30 December 2022).

).

In Saudi Arabia, as reported by the Saudi Central Bank (2021) [56], online transactions surpassed cash usage for the first time in Saudi Arabia during 2021, accounting for 94 percent of all payments assessed by value. The Saudi government sector has largely shifted to digital payment mechanisms for all outgoing payments to people, businesses, or other government agencies. This is consistent with Saudi Vision 2030, which aims to achieve 70% non-cash payments by 2025, transforming the Kingdom into a country that uses less currency.

4. Data and Methodology

The sample used to evaluate the relationship between inclusive digital finance and economic women’s empowerment is presented in

Table 2. Valid and total responses.

Year 2017 Valid and Total Responses: 1009		Year 2021 Valid and Total Responses: 1019
Female 2017	Male 2017	Female 2021	Male 2021
363 (36%)	646 (64%)	472 (46.3%)	547 (53.7%)

Source: Authors’ calculations using SPSS 24.0 software (Global Financial Inclusion (Global Findex) Database 2017 and 2021).

.

Using the Global Financial Inclusion Database for 2017 and 2021, the present research explores the connection between economic women’s empowerment and digital financial inclusion through a comparative analysis before and during COVID-19. Income variables are expressed as dependent variables. Previous researchers have found that the most accurate measure of how independent and powerful women are in their income [53,57,58] (see

Table 3. Definition of explanatory variables utilized in the models.

Gender	Respondent is Female
Age	Respondent age
Education Secondary	Respondent’s education level is secondary
Education Tertiary or more	Respondent’s education level is completed tertiary or more
Employment	Respondent’s is in the workforce
Has an account	Respondent has an account at a financial institution
Saved	Respondent saved in the past year at a financial institution
Borrowed	Respondent borrowed in the past year at a financial institution
Digital payments	Respondent made bill payments online using the Internet
Gender × Digital payments	Female respondents made bill payments online using the Internet
Gender × Employment	Female respondent is in the workforce

).

The ordered probit model is preferable for the investigation when the variable of interest has more than two values and these values have a natural ordering. The ordered probit model is a regression model for an ordinal response variable. The model is based on the cumulative probabilities of the response variable, and more specifically, it assumes that each cumulative probability’s probit is a linear function of the covariates with constant regression coefficients across response categories [59].

$$incom{e}_i=\alpha +{\beta }_{1}gender+{\beta }_{2}age+{\beta }_{3}ed{u}_i+{\beta }_{4}emp+{\beta }_{5}F{I}_j+\epsilon i$$

(1)

where $incom{e}_i$ is a cardinal measure of income, $F{I}_j$ is a vector of financial inclusion indicators.

• Furthermore, j = 1…3

j = 1; pillar access defined by the respondent having an account at a financial institution;

j = 2; pillar usage defined by respondent savings in the past year at a financial institution;

j = 3; pillar quality defined by respondent making bill payments online using the Internet.

Under the ordinary assumption, ordered probit models assume a continuous and latent measure of the dependent variable:

• where, i = 1…5

i = 1; poorest 20%

i = 2; second 20%

i = 3; middle 20%

i = 4; fourth 20%

i = 5; richest 20%

Economies develop as more women work. As well as other beneficial growth effects, the economic empowerment of women raises productivity, enhances economic diversification, and increases income equality. Increased educational attainment among women and girls promotes a more equitable economy as well as the economic empowerment of women. For women’s safety and wellness, along with their income-generating opportunities and participation in the formal labor market, education, upskilling, and re-skilling throughout life are essential. This is especially true in light of the rapid technological and digital changes affecting jobs. Around the world, women are still less likely than men to enter the workforce. Women are overrepresented in precarious and informal jobs. The economy cannot function without unpaid care work, but it frequently goes unreported and unacknowledged. According to estimates, between 10% and 39% of GDP would be made up of women’s unpaid labor if it had a monetary value. Compared to men, women are less likely to have access to financial institutions or bank accounts [60].

Based on Global Financial Inclusion Database 2017 and 2021, the three most common reasons for not banking are: (a) a lack of funds; (b) another family member has already opened an account; and (c) no need for financial services (Figure 2).

In terms of economic and financial inclusion, the Middle East and North Africa (MENA) region lags behind other regions around the world. Making financial services more readily available to the Arab region’s financially excluded has been critical in boosting financial inclusion. With efficient coordination policies and assistance for the execution of national financial inclusion policies, several projects seek to accelerate initiatives that improve access to financial services throughout the Arab world.

Figure 2, below, shows that besides this improvement, unbanked individuals exist in the millions worldwide. Unbanked adults frequently list a lack of funds, a long commute to the closest financial institution, and no urgent need to have access to financial services as the main reasons they do not have an account. Increased account ownership among communities that are difficult to reach could be achieved through global initiatives for universal access to identity and mobile phones.

5. Results and Discussion

Table 4. Descriptive statistics.

	Year 2017		Year 2021
	All Sample (100%)	Only Women (36%)	All Sample (100%)	Only Women (46.3%)
Age
15–25	268	141	334	188
	26.56%	38.84%	32.78%	39.83%
26–35	435	139	476	193
	43.11%	38.29%	46.71%	40.89%
36–45	186	53	159	72
	18.43%	14.60%	15.60%	15.25%
46–65 And > 65	120	30	50	19
	11.89%	8.26%	4.91%	4.03%
Education
Primary or less	77	29	16	8
	7.63%	7.99%	1.57%	1.69%
Secondary	557	201	498	236
	55.20%	55.37%	48.87%	50.00%
Tertiary or more	375	133	505	228
	37.17%	36.64%	49.56%	48.31%
Workforce
Out of workforce	226	163	213	168
	22.40%	44.90%	20.90%	35.59%
In workforce	783	200	806	304
	77.60%	55.10%	79.10%	64.41%
Income quintile
Poorest 20%	117	62	142	65
	11.60%	17.08%	13.94%	13.77%
Second 20%	184	70	165	72
	18.24%	19.28%	16.19%	15.25%
Middle 20%	184	76	184	72
	18.24%	20.94%	18.06%	15.25%
Fourth 20%	218	72	233	114
	21.61%	19.83%	22.87%	24.15%
Richest 20%	246	83	295	149
	24.38%	22.87%	28.95%	31.57%
Has an account at a financial institution	752	220	801	330
	74.53%	60.61%	78.61%	69.92%

Source: Authors’ calculations using SPSS 24.0 software (Global Financial Inclusion (Global Findex) Database 2017 and 2021).

shows descriptive statistics. All the variables are presented for all samples and only women for both 2017 and 2021. The largest age group is between 26 and 35 years old, representing for both samples, respectively, around 43% in 2017 and 46% in 2021. In 2017, approximately 78% of respondents were employed, rising to 80% by 2021. Regarding the variable tertiary or higher education, it increased from 37% to 49% for the entire sample, and specifically from 36% to 48% for only females. Women who have an account at a financial institution increased from 60.61% (2017) to 69.925% (2021).

Ordered probit regression models were estimated for both 2017 and 2021. For each year, three regressions were implemented. All the statistical tests carried out guarantee the relevance and quality of the regressions retained. The Chi² tests are significant at the 1% level, and the pseudo-R² of McFadden and Log pseudolikelihood are also statically satisfying. The first regression includes only digital payment, while the second and third regressions include interactive indicators between Gender × digital payment and Gender × employment. In addition to the coefficients and marginal effects (average marginal effects) of each set, the likelihood ratio indices, Wald Chi², and Pseudo R² are provided. The six separate results are shown in

Table 5. Economic women’s empowerment and digital inclusive finance: Ordered probit regressions.

	2017			2021
	Model 1	Model 2	Model 3	Model 1	Model 2	Model 3
Gender × Digital payments		−0.2104	−0.2002		−0.3528 **	−0.3734 **
		(0.1607)	(0.1623)		(0.1494)	(0.1499)
Gender × Employment			−0.2275 *			0.2990 ***
			(0.1194)			(0.1074)
Gender	−0.0539	0.0087	0.2041 *	0.2955 ***	0.5089 ***	0.2663 *
	(0.0810)	(0.0962)	(0.1069)	(0.0773)	(0.1244)	(0.1388)
Age	−0.0734 ***	−0.0744 ***	−0.0811 ***	0.0302	0.0280	0.0316
	(0.0184)	(0.0184)	(0.0183)	(0.0259)	(0.0257)	(0.0259)
Age2	0.0009 ***	0.0009 ***	0.0010 ***	−0.0007 *	−0.0007 *	−0.0007 **
	(0.0002)	(0.0002)	(0.0002)	(0.0004)	(0.0004)	(0.0004)
Education Secondary	0.6043 ***	0.5928 ***	0.5713 ***	0.6479 **	0.6033 *	0.6001 *
	(0.1444)	(0.1445)	(0.1428)	(0.3167)	(0.3190)	(0.3137)
Education Tertiary or more	1.1119 ***	1.1083 ***	1.0904 ***	1.0632 ***	1.0138 ***	1.0183 ***
	(0.1520)	(0.1516)	(0.1503)	(0.3161)	(0.3183)	(0.3134)
Employment	−0.2446 ***	−0.2321 ***		0.2325 ***	0.2398 *
	(0.0941)	(0.0945)		(0.0928)	(0.0929)
Has an account	0.4844 ***	0.4815 ***	0.4734 ***	0.4104 ***	0.4027 ***	0.4061 ***
	(0.0893)	(0.0893)	(0.0892)	(0.1023)	(0.1028)	(0.1024)
Saved	0.2012 ***	0.2037 ***	0.1985 ***	0.1325 *	0.1370 *	0.1371 *
	(0.0699)	(0.0701)	(0.0701)	(0.0744)	(0.0745)	(0.0742)
Borrowed	−0.1686 ***	−0.1693 ***	−0.1779 **	−0.0547	−0.0553	−0.0462
	(0.0724)	(0.0725)	(0.0723)	(0.0763)	(0.0763)	(0.0762)
Digital payments	0.1463 **	0.2036 ***	0.1990 **	0.1470 *	0.3342 ***	0.3453 ***
	(0.0769)	(0.0894)	(0.0894)	(0.0803)	(0.1141)	(0.1143)
Number of observations	1009	1009	1009	1019	1019	1019
Log pseudolikelihood	−1531.7143	−1530.8759	−1532.031	−1531.4408	−1528.5298	−1527.9718
Wald Chi2	161.11 [0.0000]	162.70 [0.0000]	159.56 [0.0000]	123.11 [0.0000]	129.25 [0.0000]	132.70 [0.0000]
Pseudo R2	0.0519	0.0524	0.0517	0.0456	0.0475	0.0478

Source: Authors’ calculations using STATA software V.13 and based on the Global Financial Inclusion (Global Findex) Databases (2017 and 2021). Robust standard errors are reported into brackets. Levels of statistical significance: *** p < 0.00. ** p < 0.05, * p <0.1. Source: Authors’ calculations using STATA software and based on the Global Financial Inclusion (Global Findex) Databases (2017 and 2021).

, which are discussed below. Marginal effects are reported in the Appendix A.

In ordered probit regression, the sign shows the direction of the change in the independent variable in response to the independent variable. There are five types of dependent variables to explain women’s economic empowerment. The ordered probit model’s interceptors’ values differing shows that the ordered categories are accurate, and vice versa. Women’s economic empowerment was classified as at the poorest income, second income, middle income, fourth income, and richest income, and the additional consequences of these five categories were analyzed. Age, education, employment, inclusive finance, and digitally inclusive finance are the most significant predictors for both periods. The model reflects more precisely the impact of age, which may have a non-linear relationship with income. It examined whether people of a particular age group were more affected than others by adding the square of the variable. For instance, the impact of age might be favorable until a specific age and then adversely impactful beyond that age. Results show that before 2017, when people get older, the effect is stronger. However, after COVID-19, when people get older, the effect is lessened. The results capture the impact of the COVID-19 crisis on the relationship between the income of older people.

Gender and Gender × digital payment variables are only significant during the COVID-19 pandemic during 2021, inducing a positive impact of digital inclusion on women’s empowerment after the pandemic, which is consistent with Alarifi and Husain’s [41] findings, showing that the Saudi context is distinct compared to other countries and that the impact of banking the e-service on e-customers differs before and during COVID-19. In fact, access to financial services may be facilitated through digital payments. The COVID-19 global health crisis and government reactions, such as lockdowns that slowed down economic activity, and increased demand for contactless financial goods and services, accelerated the transition to digital banking. People frequently pay businesses with cards and phones, while governments use digital payments to connect with marginalized people. These findings confirm Hypothesis 1 (H1) stated above.

Furthermore, the results show that the variable Gender × employment is significant in both periods with opposite signs, negative for 2017 and positive for 2021. The results are in line with the World Bank Report [61]. Saudi Arabia has been recognized as among the best reformers globally after 2017 according to the World Bank’s research “Women, Business, and the Law 2020”. Historical changes were made in Saudi Arabia to increase women’s economic engagement. Regarding the variable saving and borrowing, the results are only significant for saving during both periods. Borrowing loosed its significance during the COVID-19 period. Two possible explanations were discussed by Alshebami and Rengarajan [62], and Kim [49]. Borrowing became more difficult during COVID-19 since many people lost their jobs and then their income and did not have to reimburse credits. Second, during the pandemic, the lockdown kept people at home, reducing spending, for example, related to transportation and entrainment.

Finally, results show that the variable gender gains significance in 2021. Having an account, savings, and digital payment are strongly significant in any case [38]. Having a financial institution account, savings, and digital payment all have a positive impact on economic empowerment as measured by various income categories. For 2017, the variable gender is significant only when we introduce the interactive term Gender × Gender × employment. To be a female and in the workforce increased by 5% and 2% to be in the bottom income quintiles and decreased the probability by 2% and 6% to be in the top income quintiles. Regarding the income quintile 20% middle, the probability is around 0.3%. These results confirm broadly Hypothesis 2 (H2).

Contrary to the results of 2017, showing that being female and using digital payment is non-significant in all models of 2017, during 2021, digital payment reduced the probability to be in the income quantile poorest 20%, income quantile second 20%, and income quantile middle 20%, respectively, by 3%, 2%, and 0.7% (Model 1: 2021). Compared to Model 1 (2021), Model 2 (2021) illustrates that the results are significant, and the marginal effects are higher. In Model 2 (2021), digital payment reduced the likelihood of being in the income quantile’s poorest 20%, second-highest 20%, or middle 20% by 6.9%, 4.8%, and 1.6%, respectively.

The interactive variable Gender × digital payment becomes significant in all models for 2021. In Models 2 (2021) and 3 (2021), being female and using digital payment increases the likelihood of being in the income quantile’s poorest 20%, second-highest 20%, and middle 20% by 7.9%, 4.7%, and 1.3%, respectively, in Model 2 compared to 8.4%, 5%, and 1.3% in Model 3. These findings confirm those of Kulkarni and Ghosh [46] and Elzahi Saaid Ali [47]. Finally, the variable Gender × Gender × employment reduces the likelihood of being in the income quantile’s poorest 20%, second lowest 20%, and middle 20% by 5.5%, 4.3%, and 1.9%, respectively. COVID-19 boosted the development of financial inclusion digitalization [39]. Financial inclusion minimized income inequality; women’s participation in the non-financial system, in particular, reduced the gender gap, allowing for more inclusive development, which promotes both economic and social well-being [51,52].

The pandemic demonstrates that the trend toward a higher level of digitalization in financial services is limitless. Leaders must reduce the digital divide between and within gender to fully benefit from digital financial services in order to create inclusive societies and address increasing disparities during and beyond crises. This requires finding an appropriate balance between encouraging financial inclusion and women’s empowerment.

6. Conclusions, Study Implications, and Recommendations for Further Research

The Arab region still has the biggest gender gap in the world when it comes to women’s economic engagement, albeit with recent improvements. The development of new financial products and services that target women is one of the measures to address gender disparities in financial inclusion. However, broader societal and cultural restrictions are typically neglected, which may prevent women from fully utilizing these goods and services. The existing financial disparities have a negative influence on women’s ability to handle their finances, financial independence, career chances, and economic growth. Women have a lack of control over economic resources compared to men, hence it is crucial to increase their economic empowerment. There is an abundance of research investigating the variables that influence women’s economic empowerment; however, in a traditional society, such as Saudi Arabia, there is less information available. This study is based on newly published and original World Bank micro-data on the digital inclusion of Saudi women. The objective of this study is to investigate how Saudi Arabian women’s economic empowerment is being improved using digital financial inclusion before and after the COVID-19 pandemic. We investigate the relationship between economic women’s empowerment and digital financial inclusion through a comparative analysis before and during the COVID-19 pandemic using ordered probit models applied to indicators gathered from the Global Financial Inclusion Database for 2017 and 2021. The results show that the use of digital financial services has become more crucial after the pandemic. In fact, access to financial services may be facilitated through digital payments. According to Ozili [38], the COVID-19 global health crisis and government reactions, such as lockdowns that slowed down economic activity, and increased demand for contactless financial goods and services, accelerated the transition to digital banking. People frequently pay businesses with cards and phones, while governments use digital payments to connect with marginalized people.

Results demonstrate the potential benefits of technology use, particularly during crises. The development of mobile money, fintech services, and digital banking can be extremely helpful for low-income women. Furthermore, the results suppose that women have a greater economic role in decision-making because they have access to savings and credit, which influences their decisions in both areas. Women will maximize their personal and the household’s welfare when they make financial decisions. The investment in empowering women economically will increase the number of opportunities available to women. The results of this research are reliable with several past investigations, such as Hasler and Lusardi [23], Gonçalves and Ponchio [24], and Al Shehab and Hamdan [43], who state that financial digitalization is an important determinant of economic women’s empowerment.

Further research that incorporates both qualitative and quantitative approaches, as well as other economic dimensions beyond those covered in this study, would be beneficial. Future academics involved in women’s empowerment investigation in Saudi Arabia should focus more on other dimensions that support women’s empowerment, food security, education and training equality and quality, flexible working arrangements, healthcare equality, and mental wellbeing. The ability to target financial support to women, especially those without bank accounts, women, and the informal sector are also suggesting avenues for future work. Based on our research findings, we developed recommendations for women’s empowerment organizations. Economic self-reliance is required, but it is not sufficient for women’s empowerment; social and cultural dimensions are very important. Among the additional research suggestions, we can mention the socio-economic and cultural factors influencing women’s empowerment.

The design of social and environmental policies and programs should be taken into account by policymakers to encourage greater financial inclusion for women. The study implies that women may be deterred from preserving their wealth in the nation’s formal financial institutions by the laws and structures created to support environmental sustainability. In addition, financial inclusion in Saudi Arabia can be impacted by digital inclusion policies, which policymakers in each financial institution should take into account. Finally, the findings of this study could aid in the creation of stronger financial sector reform legislation that would increase financial development while also preventing financial institutions from taking actions that harm gender.