Digital Finance on Stability among Philippine Banks

Abstract

To promote financial inclusivity while being responsive to technology demands, the Philippine government implemented a framework that requires banks to improve and innovate their payment systems. The introduction of the National Retail Payment System raises the question of whether the aim of Bangko Sentral ng Pilipinas in advancing digital financial inclusion significantly impacts the financial stability of universal and commercial banks. This correlational study examines the impact of digital financial inclusion on bank stability utilizing principal component analysis and linear regression analysis from a dataset of 19 universal and commercial banks from 2017 to 2019. Findings showed that a higher level of digital financial inclusion is associated with higher banking stability for Philippine universal and commercial banks. While the results support the study hypothesis of a positive relationship between the two (2) variables, the statistical significance cannot be guaranteed at the outset of this analysis due to the limited number of years examined.

Keywords

• digital financial inclusion
• bsp national retail payment system
• universal banks
• commercial banks
• bank stability