IDEAS home Printed from https://ideas.repec.org/p/aoh/conpro/2025i6p91-101.html

Digital Financial Inclusion And The Level Of Financial Development

Author

Listed:
  • Sasho Arsov

    (Faculty of Economics-Skopje, Ss. Cyril and Methodius University in Skopje, North Macedonia)

  • Aleksandar Naumoski

    (Faculty of Economics-Skopje, Ss. Cyril and Methodius University in Skopje, North Macedonia)

  • Pece Nedanovski

    (Faculty of Economics-Skopje, Ss. Cyril and Methodius University in Skopje, North Macedonia)

Abstract

The paper explores the issue of digital financial inclusion as a means to overcome the traditional hurdles in access to financial services and its impact on the level of financial development. Using a broad sample of 102 countries worldwide and a time series of data ranging from 2011 to 2021, a Principal Component Analysis is applied to derive a single measure of digital financial inclusion (DFI). The ranking shows that the developed countries and the European nations in general dominate the list, while the bottom is mostly populated by African countries. Using a modified digital financial inclusion index to meet the availability of data, a regression analysis using OLS and GMM techniques was applied to determine the impact of DFI on the level of financial development. The results show that digital financial inclusion has a positive impact on financial development, so the authorities should closely monitor and support the use of digital technologies in the financial sector, as well as enhance the access of the population to these opportunities and their ability to use modern communication technologies.

Suggested Citation

  • Sasho Arsov & Aleksandar Naumoski & Pece Nedanovski, 2025. "Digital Financial Inclusion And The Level Of Financial Development," Proceedings of the International Conference "Economic and Business Trends Shaping the Future" 005, Faculty of Economics-Skopje, Ss Cyril and Methodius University in Skopje.
    • Handle: RePEc:aoh:conpro:2025:i:6:p:91-101
    as

    Download full text from publisher

    File URL: https://repository.ukim.mk/bitstream/20.500.12188/34486/1/0005%20DIGITAL%20FINANCIAL%20INCLUSION%20AND%20THE%20LEVEL%20OF%20FINANCIAL.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Aziz, Abdul & Naima, Umma, 2021. "Rethinking Digital Financial Inclusion: Evidence from Bangladesh," SocArXiv 7sr5c, Center for Open Science.
    2. Lee, Chia-Hao & Chou, Pei-I, 2018. "Financial openness and market liquidity in emerging markets," Finance Research Letters, Elsevier, vol. 25(C), pages 124-130.
    3. Yang, Xiaolan & Huang, Yidong & Gao, Mei, 2022. "Can digital financial inclusion promote female entrepreneurship? Evidence and mechanisms," The North American Journal of Economics and Finance, Elsevier, vol. 63(C).
    4. Sonja Davidovic & Ms. Elena Loukoianova & Cormac Sullivan & Hervé Tourpe, 2019. "Strategy for Fintech Applications in the Pacific Island Countries," IMF Departmental Papers / Policy Papers 2019/012, International Monetary Fund.
    5. repec:osf:socarx:7sr5c_v1 is not listed on IDEAS
    6. Luo, Haohan & Wang, Haijun & Wu, Ying, 2024. "Digital financial inclusion and tourism development," International Review of Economics & Finance, Elsevier, vol. 90(C), pages 207-219.
    7. Demirguc-Kunt, Asli & Klapper, Leora & Singer, Dorothe, 2013. "Financial inclusion and legal discrimination against women : evidence from developing countries," Policy Research Working Paper Series 6416, The World Bank.
    8. William Jack & Tavneet Suri, 2011. "Mobile Money: The Economics of M-PESA," NBER Working Papers 16721, National Bureau of Economic Research, Inc.
    9. Stijn Claessens, 2006. "Access to financial services: a review of the issues and public policy objectives," Journal of Financial Transformation, Capco Institute, vol. 17, pages 16-19.
    10. Hasanul Banna & Md Rabiul Alam, 2021. "Impact of digital financial inclusion on ASEAN banking stability: implications for the post-Covid-19 era," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 38(2), pages 504-523, May.
    11. Bittencourt, Manoel, 2011. "Inflation and financial development: Evidence from Brazil," Economic Modelling, Elsevier, vol. 28(1-2), pages 91-99, January.
    12. Nicolas R Blancher & Maximiliano Appendino & Aidyn Bibolov & Armand Fouejieu & Jiawei Li & Anta Ndoye & Alexandra Panagiotakopoulou & Wei Shi & Tetyana Sydorenko, 2019. "Financial Inclusion of Small and Medium-Sized Enterprises in the Middle East and Central Asia," IMF Departmental Papers / Policy Papers 2019/002, International Monetary Fund.
    13. repec:imf:imfdep:2019/002 is not listed on IDEAS
    14. repec:eme:sef000:sef-09-2020-0388 is not listed on IDEAS
    15. Aziz, Abdul & Naima, Umma, 2021. "Rethinking digital financial inclusion: Evidence from Bangladesh," Technology in Society, Elsevier, vol. 64(C).
    16. Liu, Yang & Luan, Lin & Wu, Weilong & Zhang, Zhiqiang & Hsu, Yen, 2021. "Can digital financial inclusion promote China's economic growth?," International Review of Financial Analysis, Elsevier, vol. 78(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Verma, Rahul & Chatterjee, Devlina, 2025. "Relative impact of digital and traditional financial inclusion on financial resilience: Evidence from 13 emerging countries," Journal of Economics and Business, Elsevier, vol. 133(C).
    2. Gallego-Losada, María-Jesús & Montero-Navarro, Antonio & García-Abajo, Elisa & Gallego-Losada, Rocío, 2023. "Digital financial inclusion. Visualizing the academic literature," Research in International Business and Finance, Elsevier, vol. 64(C).
    3. Sun, Yanan & You, Xiaotong, 2023. "Do digital inclusive finance, innovation, and entrepreneurship activities stimulate vitality of the urban economy? Empirical evidence from the Yangtze River Delta, China," Technology in Society, Elsevier, vol. 72(C).
    4. Amar Johri & Mohammad Asif & Preeti Tarkar & Waseem Khan & Rahisha & Mohammad Wasiq, 2024. "Digital financial inclusion in micro enterprises: understanding the determinants and impact on ease of doing business from World Bank survey," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-10, December.
    5. Lee, Chien-Chiang & Tang, Manting & Lee, Chi-Chuan, 2023. "Reaping digital dividends: Digital inclusive finance and high-quality development of enterprises in China," Telecommunications Policy, Elsevier, vol. 47(2).
    6. Zhang, Fengyi & Guo, Ping & Fan, Xianxian, 2025. "Can fiscal support reduce the income gap between urban and rural residents? An analysis based on heterogeneity and threshold effects," Finance Research Letters, Elsevier, vol. 80(C).
    7. Hamdi Becha & Maha Kalai & Saifeddine Houidi & Kamel Helali, 2025. "Digital financial inclusion, environmental sustainability and regional economic growth in China: insights from a panel threshold model," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 14(1), pages 1-40, December.
    8. Xie, Junming, 2025. "Banking evolution in the digital age: How digital financial inclusion induces systematic financial risk?," Finance Research Letters, Elsevier, vol. 80(C).
    9. Ghosh, Saibal, 2016. "Does mobile telephony spur growth? Evidence from Indian states," Telecommunications Policy, Elsevier, vol. 40(10), pages 1020-1031.
    10. Gupta, Sagnik Kumar & Ojha, Manini & Dhamija, Gaurav, 2025. "Banking on Connectivity: Internet Exposure and Women's Financial Autonomy," GLO Discussion Paper Series 1697, Global Labor Organization (GLO).
    11. Jiang, Ruichen & Wu, Qingtian, 2025. "Can digital inclusive finance narrow the internal and external wage gaps in enterprises?," International Review of Financial Analysis, Elsevier, vol. 102(C).
    12. Mao, Fengfu & Wang, Yuanfan & Zhu, Mengsi, 2023. "Digital financial inclusion, traditional finance system and household entrepreneurship," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    13. Li, Wenjuan & Liu, Xinghua & Zhou, Lei, 2025. "The role of digital finance in enhancing export competitiveness: insights from China's listed companies," Finance Research Letters, Elsevier, vol. 71(C).
    14. Wang, Dong & Wang, Ziwei & Cai, Wanhuan & Wu, Qiuxiang, 2024. "Digital inclusive finance, higher education expansion and regional carbon emissions: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 1091-1101.
    15. Kodongo, Odongo, 2024. "Financial inclusion effects of engaging with the fintech ecosystem," International Review of Economics & Finance, Elsevier, vol. 96(PB).
    16. Liang, Guibao & Xia, Qiao & Zhang, Lijie, 2025. "Nonlinear influence of digital finance on green economic efficiency," International Review of Financial Analysis, Elsevier, vol. 101(C).
    17. Loaba, Salamata, 2022. "The impact of mobile banking services on saving behavior in West Africa," Global Finance Journal, Elsevier, vol. 53(C).
    18. Uzir, Md Uzir Hossain & Al Halbusi, Hussam & Lim, Rodney & Jerin, Ishraq & Abdul Hamid, Abu Bakar & Ramayah, Thurasamy & Haque, Ahasanul, 2021. "Applied Artificial Intelligence and user satisfaction: Smartwatch usage for healthcare in Bangladesh during COVID-19," Technology in Society, Elsevier, vol. 67(C).
    19. Foguesatto, Cristian Rogério & Righi, Marcelo Brutti & Müller, Fernanda Maria, 2024. "Is there a dark side to financial inclusion? Understanding the relationship between financial inclusion and market risk," The North American Journal of Economics and Finance, Elsevier, vol. 72(C).
    20. Md. Mominur Rahman & Nafis Sadik, 2025. "Measuring scale for digital financial services, economic growth, performance, and environmental sustainability: evidence from EFA and CFA," Quality & Quantity: International Journal of Methodology, Springer, vol. 59(2), pages 1661-1694, April.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G50 - Financial Economics - - Household Finance - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aoh:conpro:2025:i:6:p:91-101. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nikolina Palamidovska-Sterjadovska (email available below). General contact details of provider: https://edirc.repec.org/data/efukimk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.