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The impact of financial inclusion on sustainable development in the MENA region: the moderating effect of digital finance

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  • Mohammad O. Al-Smadi

Abstract

Although sustainable development has attracted growing attention from academics and practitioners, the impact of financial inclusion on sustainable development needs more studies in the MENA region. Therefore, this study aims to investigate the effect of financial inclusion on sustainable development and examines the moderating effect of digital finance on this impact in the MENA region. Financial inclusion was measured by the ratio of outstanding loans from commercial banks to GDP, while digital finance was measured by the number of automated teller machines per 100,000 individuals. Four dimensions of sustainable development were measured: general sustainable development, economic sustainable development, social sustainable development, and environmentally sustainable development. A system-generalized method of moment panel analysis is conducted using annual data from 12 countries in the MENA region for the period 2004 to 2023. Additionally, three control variables are used in the study. The results confirm the role of DF in enhancing all dimensions of sustainable development in the MENA countries. In addition, the results prove the importance of digital finance in strengthening the relationship between financial inclusion and sustainable development. This research can be used by financial regulators and institutions in MENA countries to further sustainable development.This study explores the role of financial inclusion in promoting sustainable development across economic, social, and environmental dimensions in the MENA region by introducing digital finance as a moderating variable. The findings show a positive impact of financial inclusion on all dimensions of sustainable development, which is amplified by technological innovations. The findings suggest actionable insights for policymakers and financial institutions aiming to accelerate the improvement of the Sustainable Development Goals through directed digital financial strategies.

Suggested Citation

  • Mohammad O. Al-Smadi, 2025. "The impact of financial inclusion on sustainable development in the MENA region: the moderating effect of digital finance," Cogent Economics & Finance, Taylor & Francis Journals, vol. 13(1), pages 2563158-256, December.
    • Handle: RePEc:taf:oaefxx:v:13:y:2025:i:1:p:2563158
    DOI: 10.1080/23322039.2025.2563158
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