The Impact of Digital Financial Inclusion on Sustainable Economic Growth in Emerging Economies: A Panel Data Analysis

Abstract

This paper investigates the impact of digital financial inclusion (DFI) on sustainable economic growth in emerging economies. Utilizing a panel dataset of 25 emerging economies from 2010 to 2022, we employ a Generalized Method of Moments (GMM) estimation technique to address potential endogeneity issues. Our analysis focuses on various dimensions of DFI, including mobile money penetration, internet access, and the use of fintech services. The results demonstrate a significant positive relationship between DFI and sustainable economic growth, measured by GDP growth rate adjusted for environmental degradation. We find that increased access to digital financial services empowers marginalized populations, fosters entrepreneurship, and enhances overall economic efficiency, leading to more sustainable growth trajectories. Furthermore, the study examines the moderating role of institutional quality and human capital in amplifying the impact of DFI on economic growth. The findings provide valuable insights for policymakers in emerging economies seeking to leverage DFI as a catalyst for inclusive and sustainable development.