Digital Financial Inclusion and Human Development: Cross-Country Evidence from Developing Economies

This paper examines whether digital financial inclusion (DFI) is positively associated with the Human Development Index (HDI) across developing economies and whether governance quality moderates that relationship. The current research uses a five-wave panel of 108 developing countries for 2011 to 2024, anchored on the World Bank Global Findex 2025, and estimates country and year fixed-effects regressions alongside a within-demeaned dynamic panel model that conditions on lagged HDI. The study reports associations, not causal effects. Three findings emerge. First, DFI is positively and significantly associated with HDI across all specifications, with the association persisting in the dynamic model (coefficient = 0.155, p < 0.001). A one-standard-deviation DFI increase co-varies with roughly 13 per cent of the average HDI change observed over the study period. Second, the DFI–governance interaction is statistically indistinguishable from zero across all six individual governance dimensions: H2 is not supported. Third, a leads specification shows no significant association between future DFI and current HDI (p = 0.319), providing limited evidence against strong reverse causality. The study explicitly notes limitations: the absence of an instrumental variable strategy precludes causal identification; country-specific time trends cannot be entirely excluded; and the five-wave structure of the Global Findex imposes a coarse temporal grid. These findings are offered as exploratory associations suitable for replication with sub-national panel data and quasi-experimental designs.