International Conference on Economics, Finance & Business, Rome

FINANCIAL INCLUSION BEYOND ACCESS: PROMOTING FINANCIAL STABILITY AND EFFICIENCY FOR SUSTAINABLE DEVELOPMENT THROUGH DIGITAL INTEGRATION

ARSALAN HANEEF MALIK, AWAIS UR REHMAN, ABU HASSAN BIN MD ISA, RIDA AHMED

Abstract:

Digital financial inclusion (DFI) aims to broaden financial access via digital infrastructure, facilitating the achievement of the Sustainable Development Goals (SDGs) by fostering financial empowerment. Yet, the interplay between DFI, financial stability (FS), and financial efficiency (FE) and how these relationships contribute to sustainability remains insufficiently examined. This study explores how DFI, FS, and FE impact the attainment of SDGs in developing Asian nations. Data were gathered from all Asian countries to create composite indices for DFI, SDGs, FS, and FE through principal component analysis (PCA). The impact of DFI, FS, and FE on SDG advancement was analyzed using the generalized method of moments (GMM), including the mediating effects of FS and FE. Findings show that DFI positively affects FE, indicating better resource distribution and enhanced access to financial services. Conversely, DFI adversely influences FS, increasing cyber risks and potential financial instability, despite improved accessibility. Therefore, implementing DFI necessitates a careful and nuanced strategy. Its successful integration must be backed by robust regulatory frameworks, thorough risk management strategies, and focused efforts to eliminate the digital divide. Achieving a balance between FE and FS will empower policymakers to harness DFI for inclusive economic growth and progress towards the SDGs, while customizing solutions to fit local conditions.

Keywords: Cybersecurity, digital financial inclusion, financial efficiency, financial inclusion, financial stability, SDGs