WHICH RISKS, WHICH BENEFITS, AND FOR WHOM? A MULTI-GROUP TEST OF THE RISK–BENEFIT FRAMEWORK AMONG USERS AND NON-USERS OF DIGITAL FINANCE IN PAKISTAN

Abstract

Digital finance is the key enabler of financial inclusion in developing economies but in Pakistan, even after the availability of instant-payment infrastructure free at the point of use, digital finance is the second lowest in South Asia. The questions in this study are which perceived risks and benefits influence attitudes towards digital finance. Do those risks and benefits differ for digital transactors and non-digital transactors, and does financial literacy dictate the translation of attitudes into intentions? A model of seven risk dimensions and seven benefit dimensions was estimated based on survey data from 485 bank account holders in Pakistan (276 users and 209 non-users) using the PLS-SEM, with measurement invariance verified via MICOM prior to a permutation-based multi-group comparison, which incorporated the Theory of Reasoned Action, the Technology Acceptance Model, and the risk–benefit framework. All fourteen dimensions are important to users, with psychological risk providing the most powerful deterrent and convenience with the most powerful driver. Among non-users, financial risk, social risk, relative advantage and ease of use are not significant and financial literacy does not moderate the attitude–intention path. Attitude is a much stronger predictor of intention among users than among non-users and eleven out of sixteen paths are significantly different between users and non-users. Thus, experience not only reinforces perceptions, but it also renders those perceptions evaluable—and the users and non-users are not merely two points on a continuum of adoption; they are two populations with differently structured processes of evaluation.