Financial inclusion, technologies, and worldwide economic development: A spatial Durbin model approach

Abstract

Using panel data from 144 countries, this study constructed an inclusive financial evaluation index and depicted the inclusive finance development worldwide under digital empowerment through classification. It reviewed the spatial effect of financial inclusion in developed and developing countries by throwing light on demand, supply, and regulatory factors via the spatial Durbin model. The mediating and regulatory effects model examines the transmission mechanism of financial inclusion with a focus on financial literacy, scientific and technological levels, and regulatory quality. The results show that the level of financial inclusion in developed countries is significantly higher than in developing countries. The economic level of developed countries positively impacts financial inclusion in their countries and neighbouring ones. Enhancing financial literacy, science and technological level, and supervision quality improve the development of inclusive finance. While the economic level and urbanization rate in developing countries inhibit the development of financial inclusion, countries with lower economic development and urbanization rates have a greater incentive to develop digital financial inclusion. The improved economic development in developing countries favours financial inclusion in countries nearby. Moreover, financial literacy plays a positive moderating role in the effect of digital finance on financial inclusion. The technology level can exert a transmission effect on financial inclusion through an elevated level of digital finance. The impact of regulatory quality on financial inclusion can be conveyede by creating a stable economic and financial environment and improving economic development levels. This study expands the theoretical research on constructing an inclusive finance evaluation system and its impact mechanism. It provides essential decision-making references for governments, relevant decision-making departments, financial institutions and financial technology enterprises to develop inclusive finance.