Digital financial inclusion, environmental quality, and economic development: the contributions of financial development and investments in OECD countries.

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.