Is digital finance associated with household financial portfolio diversification? Evidence from India's AIDIS 77th round

Abstract

Purpose The study examines the relationship between access to digital finance (DF) and household financial asset portfolio diversification in India. It aims to examine whether access to DF is associated with reducing portfolio concentration and increased participation in formal financial markets, with a focus on rural–urban differences. Design/methodology/approach The study is based on unit-level data from the All-India Debt and Investment Survey (AIDIS, 2019). The study uses the Standardised Gini-Simpson Index (SGI) to measure household financial asset diversification. A fractional probit model is employed to analyse the association between digital financial access and portfolio diversification, controlling for socio-economic and institutional factors. The robustness of the results has been tested through a fractional logit regression model, propensity score matching and a sensitivity analysis for unobserved selection bias. Findings The study finds that digital financial access, education and institutional participation are associated with household financial asset diversification in India, with the association for DF access being comparatively modest in magnitude relative to education and institutional participation. DF access is associated with greater diversification in both rural and urban areas, with a somewhat larger association in rural areas, though this difference is not statistically confirmed. Originality/value This study extends the inquiry into DF and portfolio diversification to India, using nationally representative data. It applies an explicit rural–urban lens, in a setting where physical assets still dominate household wealth. It enriches the household finance literature by testing whether this relationship holds outside the contexts where it has already been studied. The findings point to a positive association between DF access and household portfolio diversification, suggesting this may be a relevant area for policy attention.

The authors' abstract, as published at the source. Journal of Economic Studies, 2026 · DOI ↗