Impact of digital financial inclusion on economic growth: a study on Bangladesh

Abstract

PurposeThe purpose of the study is to find out the impact of Digital Financial Inclusion (DFI) on economic growth [(Industrial Production Index (INDP)] of Bangladesh.Design/methodology/approachUsing the monthly data over the period 2018 M12 to 2021 M12, this study applied the Auto-regressive Distributed Lag (ARDL) model to assess the effect of DFI indicators on INDP. The secondary data was collected from the Bangladesh Bank and CEIC Global Economic Data.FindingsThe study found that the majority of DFI indicators are positively associated with INDP. From the short-run ARDL, it is seen that one unit positive increase in Point of Sales Transactions (POST) can increase the INDP by 0.055 units. From the long-run ARDL, it is seen that POST and e-commerce transactions (ECOMT) have a significant positive impact, while Automated Teller Machine Transactions (ATMT) have a significant negative effect on INDP. One unit increase in POST and ECOMT increases INDP by 0.13544 and 0.11611 units, respectively.Research limitations/implicationsDuring the era of the fourth industrial revolution, the findings will be beneficial for policymakers, financial technology service providers, manufacturers, consumers, corporations and investors as they pave the way for a more inclusive approach to financial transactions for economic growth.Originality/valueThe study’s novelty is that it explored the influential DFI indicators and shed light on both short-run and long-run relationships between the indicators and macro-economy from the context of a developing nation.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-04-2023-0306