Impact of women’s use of digital finance on household consumption expenditure in India: a propensity score matching approach

Consumption is a major driver of India’s economic growth. Digital payment instruments provide more convenient and faster payment for goods and services. This study examines the impact of women’s use of digital financial services on household expenditure behaviour, and explores the underlying mechanisms. Using the 2019 All India Debt and Investment Survey (AIDIS) data, we employ the propensity score-matching estimator to address selection bias associated with the adoption of digital financial services. The empirical results suggest that women with access to digital finance exhibit a 23.9 percentage points higher monthly per capita household consumption expenditure than those without access. A heterogeneity analysis suggests that urban and wealthier households experience a more positive effect of digital finance on consumption expenditure relative to their counterparts. Further analysis indicates that lower transaction costs and women’s intrahousehold allocation are the primary mediating variables through which digital finance affects household consumption expenditure. The study suggests increasing supply-side efforts, local-language community training, and mitigating societal and cultural barriers promote digital finance adoption. Policies should facilitate effective use of digital finance among significantly associated groups, particularly in rural households, thus contributing to inclusive development and achievement of Sustainable Development Goals (SDGs) 5 and 12. Digital financial services are increasingly transforming household consumption patterns, yet their implications for women’s use of digital finance and household expenditure behaviour remain underexplored. Using India’s 2019 All India Debt and Investment Survey, we find that women’s adoption of digital financial services is associated with higher household per capita consumption expenditure, with the effect varying across wealth and urban groups. Lower transaction costs and women’s intrahousehold allocation emerge as key mechanisms that explain this relationship. The findings highlight the importance of promoting digital finance adoption and addressing societal and cultural barriers to support inclusive development.