Digital Payments and Business Creation: Within-Between Evidence from Developing Economies

This study examines whether digital-payment adoption is associated with formal business creation in developing economies, and whether the association reflects within-country changes or persistent between-country differences. Global Findex waves for 2014, 2017, 2021/22 and 2024 are combined with the World Bank Entrepreneurship Database and World Development Indicators, yielding 289 country-wave observations from 86 developing economies. The outcome is log new business density, the number of newly registered limited-liability companies per 1,000 working-age people, a measure of formal incorporation rather than of entrepreneurship in general. A within-between specification with region fixed effects shows that a 10-percentage-point higher country mean in digital-payment use is associated with 0.298 higher log new business density, whereas the within-country coefficient is −0.004 (95% CI −0.103 to 0.094). Wild-cluster bootstrap inference rejects equality of the two coefficients (p<0.001). The rejection holds across the principal sample-restriction and survey-mode checks and for most alternative indicators, mobile-money account ownership being the exception. Forward-transition models show no significant association with subsequent business-density growth, and exploratory moderator tests do not support a simple complementarity with internet access or private credit. Because the between coefficient may reflect persistent country characteristics, the findings caution against reading cross-country digital-finance correlations as short-run policy effects on formal business creation.