A sustainable societal transformation in central and Southern Asia: Examining the synergy of digital inclusive finance and E-governance

This study examines how digital inclusive finance (DIF) and e-governance (EGOV) jointly shape sustainable societal transformation (SST) in Central and Southern Asian economies from 2004 to 2023, a regional setting that remains unexplored in the technology-sustainability literature. We represent SST by an environmentally adjusted domestic product indicator that reflects societal welfare and environmental protection while accounting for natural resource depletion. Bringing DIF and EGOV together within the framework of sustainable development theory, we examine whether their interaction generates stronger sustainability outcomes. We estimate the models using Driscoll-Kraay fixed effects standard error (DKFESE) and validate the robustness with Two-Stage Least Squares (TSLS). The results reveal that stronger EGOV significantly promotes DIF. Both DIF and EGOV exhibit positive associations with SST, and their interaction is also positive and significant. It indicates complementarity because sustainability gains are larger when DIF expands alongside improvements in EGOV. Panel Granger causality further reveals a feedback causal link between DIF and EGOV, as well as one-way causality from EGOV to SST and from SST to DIF. These findings suggest that the societal benefits of digital finance are maximized when supported by an effective EGOV that improves digital public services, transparency, and regulatory capacity. Policy priorities should include interoperable digital platforms and secure digital identity systems, together with targeted financial capability programs for underserved groups to translate digital access into sustained societal transformation.