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Evaluating the influence of digital financial inclusion on financial crises and economic cycles: a Bayesian logistic regression insight

Author

Listed:
  • Dinh Le Quoc
  • Huy Nguyen Quoc
  • Hai Nguyen Van

Abstract

Purpose - This paper aims to examine the impact of Digital Financial Inclusion (DFI) on three key economic aspects: banking crises, economic expansion and economic downturns across 93 countries from 2004 to 2017. Design/methodology/approach - Bayesian Logit regression models provide important insights into how DFI influences these economic factors. Findings - The findings show that DFI has a modest positive effect on banking crises (coefficients: 0.002–0.027), but rapid growth could increase crisis risks if not regulated. DFI positively impacts economic expansion (coefficients: 0.003–0.012), supporting growth at reasonable levels. For economic downturns, DFI has a negative effect, potentially reducing recession risks, though the impact is small. Regionally, DFI helps mitigate banking crises and downturns in Africa, Latin America and Asia, but in Europe, it slightly increases risks, suggesting potential instability if not properly managed. Originality/value - The study provides original insights into the nuanced effects of DFI on banking crises, economic expansion and economic downturns across different regions, offering valuable policy recommendations based on these findings.

Suggested Citation

  • Dinh Le Quoc & Huy Nguyen Quoc & Hai Nguyen Van, 2025. "Evaluating the influence of digital financial inclusion on financial crises and economic cycles: a Bayesian logistic regression insight," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 33(2), pages 280-301, January.
  • Handle: RePEc:eme:jfrcpp:jfrc-10-2024-0206
    DOI: 10.1108/JFRC-10-2024-0206
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    More about this item

    Keywords

    Digital financial inclusion; Banking crisis; Economic expansion; Economic downturn; E32; G01; O16; O40;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G01 - Financial Economics - - General - - - Financial Crises
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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