The role of digital pawn and bullion markets in strengthening financial inclusion

Abstract

Background: Financial inclusion in Indonesia remains constrained by a structural mismatch between conventional banking instruments and the socio-economic realities of informal households and micro-enterprises, despite rapid financial digitalization. While fintech expansion has broadened access, inclusion driven by unsecured, expectation-based credit raises concerns about systemic vulnerability. In this setting, digital gold pawn and bullion markets offer an asset-anchored pathway that leverages gold’s long-standing role as a trusted, liquid, and widely held real asset. This study examines how digital gold-based non-bank financial services expand inclusion while shaping economic stability within Indonesia’s evolving financial architecture. Methods: An integrated mixed-method design combines descriptive and comparative quantitative analysis of secondary data from 2018–2024 with a qualitative review of policy and regulatory frameworks governing non-bank finance, digital platforms, and gold-based transactions. Quantitative indicators include user growth, transaction values, loan performance, and asset accumulation, while qualitative analysis assesses governance alignment, consumer protection, and supervisory coherence across institutions. Findings: Results show sustained and accelerating adoption of digital gold pawn and bullion services, particularly among unbanked households and micro-scale enterprises, alongside relatively low default rates and more stable transaction performance than unsecured digital credit. Gold’s price stability and liquidity function as endogenous discipline mechanisms that constrain excessive leverage, while digital platforms reduce procedural and geographic barriers to access. Rapid scaling redistributes operational, custodial, and consumer protection risks toward non-bank institutions operating within fragmented regulatory environments, highlighting governance as a decisive mediator of outcomes. These patterns indicate that inclusion and stability are conditionally linked through asset structure and regulatory coherence rather than inherently opposed. Conclusion: Digital gold-based finance can strengthen financial inclusion without undermining systemic resilience when technological scalability is structurally aligned with real-asset discipline and harmonized oversight. Novelty/Originality of this article: The study advances a hybrid financial inclusion framework that connects informal asset ownership with formal financial systems, and empirically demonstrates how asset-backed digital intermediation reshapes risk allocation, access dynamics, and stability outcomes within a developing digital economy.