The optimal inflation threshold in digital financial inclusion: a key to sustainable development

• Published in: SN Business & Economics Vol. 5; no. 5
• Main Author: Dinh, Le Quoc
• Format: Journal Article
• Language: English
• Published: Cham Springer International Publishing 04.04.2025
• Subjects: Business and Management; Economics; Finance; Original Article; Inflation; SDGs; Sustainable development; Digital financial inclusion
• ISSN: 2662-9399; 2662-9399
• DOI: 10.1007/s43546-025-00810-1

Climate change is no longer a challenge confined to individual nations; it is a collective responsibility of the global community. Faced with the destructive potential of the "brown economy," sustainable development (SD) has become imperative for all economies worldwide. In this context, digital financial inclusion (DFI) serves as a crucial tool for promoting SD. Moreover, in an inflationary environment marked by instability, the impact of DFI on SD demonstrates a non-linear structural change. This study examines the influence of DFI on SD, considering the role of inflation across 117 countries from 2004 to 2022. Using threshold regression and Bayesian regression methods, the findings reveal significant variations in the impact of DFI on SD when inflation (INF) is used as a threshold variable. Specifically, in countries with low inflation (INF < 1.9853), the impact of DFI on SD is positive. Conversely, in countries with high inflation (INF > 1.9853), the impact is negative. This indicates that implementing policies to promote digital financial inclusion in low-inflation conditions can have a positive impact on sustainable development. Conversely, in high-inflation environments, the impact of digital financial inclusion on sustainable development becomes less effective, or even potentially negative, due to increased economic instability. This research provides valuable insights for designing context-specific policies that optimize the role of digital financial inclusion in achieving sustainable development goals globally. These results underscore the need for tailored policy implications that align with the inflationary context of each country.