The Role of Digital Finance in Economic Development: A Cross Country Analysis

Abstract

Nations having strong infrastructure on digital platform are likely to have more acceleration in digital finance sector and reap the benefits of this sector. The term digital finance means to provide financial services through personal computers, mobile phones or any reliable digital payment system. Digital finance has the capacity to give convenient, inexpensive and firm banking services. Financial inclusion is a win-win situation that is fulfill by digital finance. Sufficient evidences confirms that internet penetration and mobile phones built up sturdy infrastructure for digital finance and thus support in boosting economic development. Therefore, the objective of this research is to examine the impact of digital finance on World’s economic development. By pursuing the fulfillment of objective, this study collected the data of 77 countries from during the period from 2011 to 2021 and adopted two step system Generalized method of moments (GMM) to inspect the effects of mobile cellular subscriptions and internet usage on economic development parameters. Our findings indicate that mobile cellular services and internet uses have better impact on economic growth and per capita income. These findings also proposes some major policy implementations especially for developing countries that they must adopt such policies which make better ground to promote digital financial system and thus move ahead to cashless economies in order to get immense benefits from it.