DOI https://doi.org/10.36719/3104-4727/4/19-23

Fatma Rzayeva

NSU, Institute of Natural Resources

https://orcid.org/0009-0009-7281-7873

rzayevafatma11@gmail.com

The Role of Digital Financial Inclusion in Reducing Income Inequality in Developing Countries

Abstract

Digital financial inclusion (DFI) has emerged as a vital tool for promoting inclusive economic growth and reducing income inequality in developing countries. This study investigates the relationship between DFI and income inequality by employing a mixed-methods approach, combining panel data regression with case studies from Kenya, India, and Bangladesh. The findings demonstrate a significant inverse correlation between digital financial access and income inequality, measured by the Gini coefficient. The results suggest that DFI enhances financial access, promotes savings, and facilitates entrepreneurial activity, especially among women and rural populations. However, the effectiveness of DFI is influenced by factors such as digital infrastructure, financial literacy, and regulatory quality. The paper concludes with targeted policy recommendations to enhance the inclusiveness and sustainability of digital financial systems.

Keywords: Digital financial inclusion, income inequality, developing countries, mobile money, financial access, financial literacy, inclusive growth