ECONOMIC GROWTH, DIGITAL ACCESS, AND URBANIZATION: DRIVERS OF FINANCIAL INCLUSION IN A COMPARATIVE GLOBAL CONTEXT

Abstract

Financial inclusion has become a critical driver of sustainable growth and social well-being, yet its determinants vary widely across countries. This study investigates how economic growth, digital access, and urbanization shape financial inclusion within a global panel of 100 countries between 2017 and 2021. A composite Financial Inclusion Index was constructed using Principal Component Analysis to capture multiple dimensions of access and usage, while Ordinary Least Squares regression was employed to assess the impact of macroeconomic and demographic variables. The analysis was further enriched by applying a Gaussian Mixture Model to classify countries into distinct clusters based on shared economic and technological features. The results show that gross domestic product per capita, internet usage, and urbanization significantly enhance financial inclusion, while inflation exerts a strong negative influence. Unemployment was only marginally significant, and mobile cellular subscriptions were found to be insignificant, highlighting that technological penetration alone does not guarantee effective inclusion. The clustering results reveal structural heterogeneity: low-income economies remain constrained by weak infrastructure and instability, middle-income economies differ by their vulnerability to inflation and labor market conditions, and high-income economies exhibit strong inclusion due to digital readiness and stability. These findings underscore the need for context-specific policies, combining economic development, digital infrastructure expansion, and macroeconomic stability. The study contributes to the literature by integrating structural, technological, and demographic determinants into a unified empirical model, offering evidence-based insights for policymakers and financial institutions to design inclusive financial systems that promote growth and resilience.