Digital Finance, Financial Inclusion and Economic Growth in Emerging Markets

Abstract

Digital finance has, over the past several years, been identified as the most effective tool for economic development, especially in emerging economies. This commentary explores the contingency of digital finance, particularly the general effects related to financial liberalization and developmental economic effects, with an understanding of the world it creates where those financially locked out of mainstream formal systems are not only included but financially connected to the global economy.

This discussion positively affects digital finance, one of which is the strong tendency in the developing world toward financial inclusion. Financial inclusion means the ability of firms to access financial services within a given country and the equitable chances available. Promoting savings is essential in economic development because it allows individuals and other investors to funnel their money towards education, health, and business development. Recent technological advances, which are solved by digital finance, ensured a significant reduction of the financial inclusion rate and the availability of affordable financial services. For instance, mobile money services include M-Pesa in Kenya’s economy. These have completely changed the face of the economy as they eliminate the need for the banking system as people use their mobile phones to perform all sorts of financial activities.