Mobile Payments, Financial Literacy, and Borrowing Behavior: Evidence from the European Union

Abstract

Borrowing patterns across the European Union are being influenced by the widespread use of mobile payment technologies, the distribution of financial education, and financial access. Although digital finance has increased convenience and inclusion, it has also led to the risk of impaired borrowing and overconsumption, and debt that is much more prevalent in the under-25 age group. This paper investigates the combined role of mobile payment use, financial literacy, and financial access in borrowing behavior in EU countries. Based on the descriptive, correlational, and regression analyses applied to the data of Eurobarometer 525 on the financial literacy-informed proper borrowing relationship, it has been found that money literacy plays a vital role in causing proper lending, and positive money literacy ratings are significantly correlated with loan participation. Access to minimal financial infrastructure (bank accounts, bank savings products, bank credit) was also a powerful facilitator of borrowing, and long-term products like pensions and investment solutions reduced loan demand too. On the other hand, digital comfort with mobile payments negatively correlated with loan ownership, indicating that digitally competent consumers may substitute formal borrowing with other financial instruments or cast behavioral dispositions that are specifically supportive of turning away from formal credit. More studies are needed to be done that clarify the complexity associated with borrowing in a digitized financial landscape, where knowledge and inclusion promote responsible borrowing and digital finance has both empowering and destabilizing impacts. The study concludes that an integrated approach to certain policy interventions involving the combination of financial education, equitable access, and protection against the behavioral biases of digital borrowing is required to unlock financial resilience and sustainable credit behavior in the EU.