Abstract
Between the fifteenth and seventeenth centuries, financial systems have evolved significantly. It has been largely driven by the need to safely store valuable assets. This concept served as the basis for modernised financial institutions, which have developed substantially due to the technological advancements in telecommunications as well as information systems. These vast advancements have enabled financial institutions to offer various product and service offerings. Financial technology companies (FinTechs), Microfinance institutions and digital services supported by government policies have been identified as key contributors towards the fundamental changes in finance. Despite the developments, a considerable portion of the population of the world cannot access these services, resulting in low inclusion in several economies. This is mainly due to obstacles such as limited accessibility, poor infrastructure and financial illiteracy, which pose challenges to the development and growth of the economy.
The critical importance of financial inclusion, defined as universal availability to financial resources, is emphasised in prior research, highlighting its positive impacts on economic activity, living standards, and overall quality of life. Previous research has demonstrated that financial inclusion frameworks have been successful in increasing access to financial services. Studies have shown that inclusive finance positively affects socioeconomic inclusion, emphasising that those who can access these services experience improvements in their social standing as well.
This research study incorporates a mixed methods methodology which focuses on analysing inclusive finance and identifying the critical global factors that either drive or impede accessibility to financial services. The method includes a blend of both qualitative and quantitative processes. These steps include an in-depth literature review, providing the knowledge body. Bibliometric mapping is employed to assess the nodal strength of the identified variables. Through the application of systems thinking, the identified variables are mapped together based on their causal effect, forming a conceptual model in the form of causal loop diagrams (CLDs). These CLDs represent the dynamic hypothesis of the study as they provide a process flow for decision-making. Five individual causal loop diagrams were combined into a comprehensive model that included every variable significant to financial inclusion which were transformed into a stock and flow diagram enabling the quantification of the model, providing a clear view of the dynamic components that influence financial inclusion. Word-to-vector, a natural language processing approach, was adopted to convert textual data into numerical vectors that reflected known causal relationships to further enhance the system's analysis. Once incorporated into the existing model, the generated datasets provided
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an insightful quantitative framework for illustrating the nature and depth of the causal impact on financial inclusion.
To further understand the model and the effects of the variables in the system, a design of experiments (DOE) approach was taken. This study examined how financial inclusion and economic development are influenced by infrastructure, investment, the standard of financial services, and best practices. The results demonstrated that infrastructure had an influential impact on key variables such as economic growth and inclusion highlighting the need for investments into both digital and physical infrastructure. This was further underscored when the reduction in investments were analysed as it served as a constraint further emphasising the importance of importance of continuous financial resources for the development of the financial system.
On the basis of the research results, leveraging digital financial technologies significantly enhances the accessibility of finance by making financial services cheaper and more readily accessible, particularly among countries that have emerging economies. The primary results demonstrate that economically disadvantaged communities have become more involved in the financial system because of financial technology company’s technologies, including electronic payment systems and smartphone banking. These developments are further amplified by policies that encourage knowledge of technology and collaboration between organisations from the public and private sectors. According to the results, enhancing financial inclusion through digital financial technology is critical to supporting sustainability and broader economic growth, alongside serving as critical to strengthening individuals economically. This study contributes to understanding financial inclusion's complexity and emphasises the need for targeted interventions to foster inclusive financial systems that can drive broader economic development.