The Effect of Digital Financial Services and Financial Inclusion on Economic Growth: Evidence from MENA Region

This research investigates the impact of digital financial services and financial inclusion indicators on MENA countries' economic growth rate. Using an Autoregressive Distributed Lag (ARDL) model for the period 2004-2021, the study examines the relationship between Gross Domestic Product (GDP) growth and indicators of digital financial services and financial inclusion such as the number of commercial bank branches, borrowers, and ATMs, as well as the number of internet users. The analysis reveals both a long-term equilibrium relationship and a short-term relationship between digital financial inclusion variables and economic growth. Results indicate a positive relationship between the number of bank branches and economic growth in the short and the long term in MENA region. In addition to that, borrowers have a positive association with economic growth in the long run. Moreover, the number of ATMs demonstrates a positive impact on GDP growth in the short run. This finding suggests that providing a sufficient number of ATMs is crucial to fostering economic activity.