Publication Details
Abstract
Digital financial inclusion has emerged as a transformative mechanism that extends financial access, reduces transaction costs, and promotes economic stability, particularly in developing economies. In Iraq, limited banking infrastructure, low ATM penetration, and reliance on cash-based systems hinder the potential benefits of financial technology. Despite growing global research on digital finance, empirical evidence on its macroeconomic effects in financially underdeveloped contexts like Iraq remains limited. This study investigates the impact of digital financial inclusion on Iraq's economic performance from 2010 to 2023 using an econometric framework combining factor analysis and Ridge Regression with Bootstrap resampling. The findings reveal that indicators such as ATM availability, banking spread, and branch density significantly influence an economic performance index derived from poverty, unemployment, and financial depth metrics. The model achieved strong predictive accuracy, with an R² of 0.79 and a mean absolute percentage error of 8.8%. Future projections show fluctuations in economic performance, emphasizing the role of financial accessibility in macroeconomic stability. The research introduces a robust statistical model tailored for data-limited environments, employing Ridge Regression to address multicollinearity and Bootstrap techniques to improve reliability, offering a replicable method for analyzing financial inclusion effects. The study provides policy-relevant insights, highlighting the importance of expanding digital financial infrastructure to enhance economic resilience in Iraq. It underscores the need for targeted regulatory reform, digital literacy programs, and strategic financial sector investments to sustain inclusive economic growth.