Abstract
Economic development has long acknowledged the significance of financial innovation and technological advancement. Communication technology increases the availability of information, generates new modes of communication, restructures production processes, and enhances the efficacy of a wide range of economic operations. This study investigates the effects of digital financial inclusion and information and communication technology (ICT) on economic growth in 38 OECD nations between 2004 and 2020, with a focus on the contributions of financial development and investments in non-financial assets. To this end, advanced econometric methodologies are employed to conduct an exhaustive empirical analysis utilizing second-generation panel unit root and cointegration techniques. The results demonstrate a positive correlation between digital financial inclusion, information and communication technology, population growth, and non-financial investments in OECD nations. It is recommended that OECD policymakers promote digital financial inclusion by utilizing cost-effective digital technologies to reach currently financially excluded and underserved populations. This can be achieved through a variety of formal financial services that are tailored to their needs and responsibly delivered at a cost that is affordable to customers and sustainable for providers. Moreover, policymakers are recommended to promote information and communication technologies that strengthen the means for implementing Sustainable Development Goals through international cooperation and coordination, technology transfer, capacity building, strengthening multi-stakeholder partnerships, and data monitoring and accountability. Finally, a detailed conclusion is provided to discuss the research limitations and future directions.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Data availability
Not applicable
References
Abiola B, Adegboye F, Omankhanlen A (2015) International Journal of Economics and Financial Issues financial inclusion and economic growth in Nigeria. Int J Econ Financ Issues 5:629–637
Ahmad M, Majeed A, Khan MA, Sohaib M, Shehzad K (2021) Digital financial inclusion and economic growth: provincial data analysis of China. China Economic J 14:291–310. https://doi.org/10.1080/17538963.2021.1882064
ul Ain N, Sabir S, Asghar N (2020) Financial inclusion and economic growth: empirical evidence from selected developing economies. Rev Econ Dev Stud 6:179–203. https://doi.org/10.47067/reads.v6i1.195
Allen F, Demirguc-Kunt A, Klapper L, Martinez Peria MS (2016) The foundations of financial inclusion: understanding ownership and use of formal accounts. J Financ Intermed. https://doi.org/10.1016/j.jfi.2015.12.003
Ang JB (2008) Financial development and economic growth in Malaysia, pp 1–197. https://doi.org/10.4324/9780203886885
Arner DW, Buckley RP, Zetzsche DA, Veidt R (2020) Sustainability, FinTech and financial inclusion. Eur Bus Org Law Rev 21:7–35. https://doi.org/10.1007/s40804-020-00183-y
Arslan HM, Khan I, Latif MI, Komal B, Chen S (2022) Understanding the dynamics of natural resources rents , environmental sustainability , and sustainable economic growth : new insights from China. Environ Sci Pollut Res. https://doi.org/10.1007/s11356-022-19952-y
Bai J, Choi SH, Liao Y (2020) Feasible generalized least squares for panel data with cross-sectional and serial correlations. Empir Econ 60:309–326. https://doi.org/10.1007/s00181-020-01977-2
Bailey D, Katz JN (2011) Implementing panel-corrected standard errors in R : the pcse Package. J Stat Softw 42. https://doi.org/10.18637/jss.v042.c01
Beardsley SC, Enriquez L, Bonini S, Sandoval S, Brun M (2010) Fostering the economic and social benefits of ICT. In: Dutta and Mia (2010). The Global Information Technology Report2009, 2010, pp 61–70
Beck N, Katz JN (1995) Time-series (with not to do ) to do ( and what cross-section). Polit Sci 89:634–647
Beck T, Demirgüç-Kunt A, Levine R (2007) Finance, inequality and the poor. J Econ Growth 12:27–49. https://doi.org/10.1007/s10887-007-9010-6
Boukhatem J (2016) Assessing the direct effect of financial development on poverty reduction in a panel of low- and middle-income countries. Res Int Bus Financ 37:214–230. https://doi.org/10.1016/j.ribaf.2015.11.008
Breusch TS, Pagan AR (1980) The Lagrange multiplier test and its applications to model specification in econometrics. Rev Econ Stud 47:239–253. https://doi.org/10.2307/2297111
Chatterjee A (2020) Financial inclusion, information and communication technology diffusion, and economic growth: a panel data analysis. Inf Technol Dev 26:607–635. https://doi.org/10.1080/02681102.2020.1734770
Chen F-W, Feng Y, Wang W (2018) Impacts of financial inclusion on non-performing loans of commercial banks: evidence from China. Sustain. https://doi.org/10.3390/su10093084
Collard S (2007) Toward financial inclusion in the UK: progress and challenges. Public Money Manag 27:13–20. https://doi.org/10.1111/j.1467-9302.2007.00550.x
Datta A, Agarwal S (2004) Telecommunications and economic growth: a panel data approach. Appl Econ 36:1649–1654. https://doi.org/10.1080/0003684042000218552
De Hoyos RE, Sarafidis V (2006) Testing for cross-sectional dependence in panel-data models. Stata J 6:482–496. https://doi.org/10.1177/1536867x0600600403
Duvendack M, Mader P (2019) Impact of financial inclusion in low- and middle-income countries: a systematic review of reviews. Campbell Syst Rev 15:e1012. https://doi.org/10.4073/csr.2019.2
Hodges R (2018) Information and communications technology. In: Technology for Facility Managers, pp 85–96. https://doi.org/10.1002/9781119572626.ch6
Hu Y, Liu C, Peng J (2021) Financial inclusion and agricultural total factor productivity growth in China. Econ Model 96:68–82. https://doi.org/10.1016/j.econmod.2020.12.021
Hussain M, Ye C, Ye C, Wang Y (2022) Impact of financial inclusion and infrastructure on ecological footprint in OECD economies. Environ Sci Pollut Res 29:21891–21898. https://doi.org/10.1007/s11356-021-17429-y
Kassi DF, Li Y, Dong Z (2021) The mitigating effect of governance quality on the finance-renewable energy-growth nexus: some international evidence. Int J Finance Econ. https://doi.org/10.1002/ijfe.2423
Khan HR (2011) Financial inclusion and financial stability : are they two sides of the same coin ? Indian Bankers Assoc Indian Overseas Bank, pp 1–12
Khan I, Hou F, Irfan M, Zakari A, Le HP (2021a) Does energy trilemma a driver of economic growth? The roles of energy use, population growth, and financial development. Renew Sust Energ Rev 146:111157. https://doi.org/10.1016/j.rser.2021.111157
Khan I, Hou F, Le HP (2021b) The impact of natural resources, energy consumption, and population growth on environmental quality: fresh evidence from the United States of America. Sci Total Environ 754:142222. https://doi.org/10.1016/j.scitotenv.2020.142222
Khan I, Hou F, Phong H, Ahtsham S (2021c) Do natural resources , urbanization , and value-adding manufacturing affect environmental quality ? Evidence from the top ten manufacturing countries. Res Policy 72:102109. https://doi.org/10.1016/j.resourpol.2021.102109
Khan K, Luo T, Ullah S, Rasheed HMW, LI, P.-H. (2023) Does digital financial inclusion affect CO2 emissions? Evidence from 76 emerging markets and developing economies (EMDE's). J Clean Prod 420:138313. https://doi.org/10.1016/j.jclepro.2023.138313
Kim D-W, Yu J-S, Hassan MK (2018) Financial inclusion and economic growth in OIC countries. Res Int Bus Financ 43:1–14. https://doi.org/10.1016/j.ribaf.2017.07.178
Koomson I, Danquah M (2021) Financial inclusion and energy poverty: empirical evidence from Ghana. Energy Econ 94:105085. https://doi.org/10.1016/j.eneco.2020.105085
Kouladoum J-C, Wirajing MAK, Nchofoung TN (2022) Digital technologies and financial inclusion in sub-Saharan Africa. Telecomm Policy 46(9):102387. https://doi.org/10.1016/j.telpol.2022.102387
Kurniawati MA (2022) Analysis of the impact of information communication technology on economic growth: empirical evidence from Asian countries. J Asian Bus Econ Stud 29:2–18. https://doi.org/10.1108/jabes-07-2020-0082
Levine R (2005) Chapter 12 finance and growth: theory and evidence. In: Aghion P, Durlauf, S.N.B.T.-H. of E.G (eds) Handbook of Economic Growth. Elsevier, pp 865–934. https://doi.org/10.1016/S1574-0684(05)01012-9
Li N, Pei X, Huang Y, Qiao J, Zhang Y, Jamali RH (2021) Impact of financial inclusion and green bond financing for renewable energy mix: implications for financial development in OECD economies. Environ Sci Pollut Res. https://doi.org/10.1007/s11356-021-17561-9
Liu Y, Luan L, Wu W, Zhang Z, Hsu Y (2021) Can digital financial inclusion promote China’s economic growth? Int Rev Financ Anal 78:101889. https://doi.org/10.1016/j.irfa.2021.101889
Menegaki A (2021) Ways of treatment of cross-sectional dependence in the energy-growth nexus and the X-variable growth nexus. In: A Guide to Econometrics Methods for the Energy-Growth Nexus, pp 161–178. https://doi.org/10.1016/b978-0-12-819039-5.00008-2
Menegaki AN (2018) The economics and econometrics of the energy-growth nexus. In: The Economics and Econometrics of the Energy-Growth Nexus, pp 1–387. https://doi.org/10.1016/c2016-0-03900-1
Mohapatra NP (2014) Financial inclusion. Econ Polit Wkly 49:4. https://doi.org/10.4018/ijabe.2020100103\
Naceur SB, Ghazouani S (2007) Stock markets, banks, and economic growth: empirical evidence from the MENA region. Res Int Bus Financ 21:297–315. https://doi.org/10.1016/j.ribaf.2006.05.002
Neaime S, Gaysset I (2018) Financial inclusion and stability in MENA: evidence from poverty and inequality. Financ Res Lett 24:230–237. https://doi.org/10.1016/j.frl.2017.09.007
Ntow-Gyamfi M, Bokpin GA, Aboagye AQQ, Ackah CG (2020) Environmental sustainability and financial development in Africa; does institutional quality play any role? Dev Stud Res 7:93–118. https://doi.org/10.1080/21665095.2020.1798261
OECD, 2020. Advancing the digital financial inclusion of youth.
Onaolapo AR (2015) Effects of financial inclusion on the economic growth of Nigeria (1982-2012). Int J Bus Manag Rev 3:11–28
Oshora B, Desalegn G, Gorgenyi-Hegyes E, Fekete-Farkas M, Zeman Z (2021) Determinants of financial inclusion in small and medium enterprises: evidence from Ethiopia. J Risk Finan Manag 14:286. https://doi.org/10.3390/jrfm14070286
Ouma SA, Odongo TM, Were M (2017) Mobile financial services and financial inclusion: Is it a boon for savings mobilization? Rev Dev Finance 7:29–35. https://doi.org/10.1016/j.rdf.2017.01.001
Ozili PK (2021) Financial inclusion research around the world: a review. In: Forum for social economics, vol 50, pp 457–479. https://doi.org/10.1080/07360932.2020.1715238
Ozili PK (2018) Impact of digital finance on financial inclusion and stability. Borsa Istanbul Rev 18:329–340. https://doi.org/10.1016/j.bir.2017.12.003
Peng P, Mao H (2023) The effect of digital financial inclusion on relative poverty among urban households: a case study on China. Soc Indic Res 165:377–407. https://doi.org/10.1007/s11205-022-03019-z
Pesaran MH (2007) A simple panel unit root test in the presence of cross-section dependence. J Appl Econ 22:265–312. https://doi.org/10.1002/jae
Peterson EWF (2017) The role of population in economic growth. SAGE Open 7. https://doi.org/10.1177/2158244017736094
Pham MH, Doan TPL (2020) The impact of financial inclusion on financial stability in Asian countries. J Asian Finance Econ Bus 7:47–59. https://doi.org/10.13106/JAFEB.2020.VOL7.NO6.047
Rojas Cama FA, Emara N (2022) Financial inclusion and gross capital formation: a sectoral analysis approach for the MENA region and EMs. Int Rev Financ Anal 79:101993. https://doi.org/10.1016/j.irfa.2021.101993
SAVAŞ B (2008) The relationship between population and economic growth : empirical evidence from. OAKA 6:161–183
Sethi D, Acharya D (2018) Financial inclusion and economic growth linkage: some cross country evidence. J Financ Econ Policy 10:369–385. https://doi.org/10.1108/JFEP-11-2016-0073
Shahbaz M, Li J, Dong X, Dong K (2022) How financial inclusion affects the collaborative reduction of pollutant and carbon emissions: the case of China. Energy Econ 107:105847. https://doi.org/10.1016/j.eneco.2022.105847
Stata, O., 2022. 2022 Stata Conference 2022 Stata Conference.
Sukharev O, Voronchikhina E (2020) Financial and non-financial investments: comparative econometric analysis of the impact on economic dynamics. Quant Finance Econ 4:382–411. https://doi.org/10.3934/qfe.2020018
van de Ven P (2017) A full accounting for wealth: including non-financial assets. In: Understanding Financial Accounts, pp 279–302. https://doi.org/10.1787/9789264281288-11-en
Van Der Werff AD, Hogarth JM, Nathanael DP (2013) A cross-country analysis of financial inclusion within the OECD. In: Consumer Interest Annual, vol 59, pp 1–12
von Fintel D, Orthofer A (2020) Wealth inequality and financial inclusion: evidence from South African tax and survey records. Econ Model 91:568–578. https://doi.org/10.1016/j.econmod.2020.02.001
Wang X, Wang X, Ren X, Wen F (2022) Can digital financial inclusion affect CO2 emissions of China at the prefecture level? Evidence from a spatial econometric approach. Energy Econ 109:105966. https://doi.org/10.1016/j.eneco.2022.105966
Waverman L, Meschi M, Fuss M (2005) The impact of telecoms on economic growth in developing countries. In: The Vodafone policy paper series, vol 3
Westerlund J (2007) Testing for error correction in panel data. Oxf Bull Econ Stat 69(6):709–748. https://doi.org/10.1111/j.1468-0084.2007.00477.x
World Bank (2022) Financial inclusion [WWW Document]. WORLD BANK URL https://www.worldbank.org/en/topic/financialinclusion (accessed 4.1.22)
Zakari A, Khan I, Tawiah V, Alvarado R, Li G (2022) The production and consumption of oil in Africa : The environmental implications. Res Policy 78:102795. https://doi.org/10.1016/j.resourpol.2022.102795
ZHANG XUN, ZHANG J, WAN G, LUO ZHI (2019) Finthc, growth and inequality: evidence frim China’s household survey data. Singap Econ Rev 65:75–93. https://doi.org/10.1142/S0217590819440028
Acknowledgements
Natural Science Foundation of China (NSFC) [grant ID: 72250410376].
Author information
Authors and Affiliations
Contributions
Ali Hashemizadeh: writing basic draft, literature
Rana Umair Ashraf: editing, software, modeling
Irfan Khan: supervision, revision, software, modeling
Syed Anees Haider Zaidi: supervision, revision, software, modeling
Corresponding author
Ethics declarations
Ethical approval
Not applicable.
Consent to participate
Not applicable.
Consent for publication
Not applicable.
Competing interests
The authors declare no competing interests.
Additional information
Responsible Editor: Eyup Dogan
Publisher’s Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Hashemizadeh, ., Ashraf, R.U., Khan, I. et al. Digital financial inclusion, environmental quality, and economic development: the contributions of financial development and investments in OECD countries. Environ Sci Pollut Res 30, 116336–116347 (2023). https://doi.org/10.1007/s11356-023-30275-4
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11356-023-30275-4