Published Online:July 2026
Product Name:The IUP Journal of Applied Economics
Product Type:Article
Product Code:IJAE020326
DOI:10.71329/IUPJAE/2026.25.3.25-44
Author Name:Vandana Bhavsar, Pradeepta Kumar Samanta and Kirti Mehta
Availability:YES
Subject/Domain:Economics
Download Format:PDF
Pages:25-44
The study investigates whether digital financial inclusion (DFI) can produce the same positive effect as traditional financial inclusion (TFI) and what is the magnitude of their impact on Indian economic growth. By using a multidimensional concept of financial inclusion, specific indices for TFI and DFI were constructed for analysis. To achieve the objectives of the study, autoregressive distributed lag (ARDL) model, generalized method of moments (GMM) and the Granger causality test are employed to empirically gauge the relationship between FI and economic growth in India. The findings indicate that although both FIs are growth-stimulating, the impact (scale effect) of DFI on economic growth rises significantly after accounting for the structural break. The findings provide evidence for endogenous growth theory and validate the principles of public good theory. The results of the present study might be of much interest to policymakers designing various programs to promote and enhance financial inclusion.
A sound financial system ensures the proper flow of money, which further accelerates the growth of the economy. Financial inclusion (FI) forms a strong foundation of the financial infrastructure of a country and thus leads to development and economic growth.