Harnessing Artificial Intelligence to Enhance Financial Inclusion: Insights from a Cross-Sectional Study

The rise of digital transformation has significantly contributed to financial development and economic growth. This study investigates the impact of artificial intelligence (AI) adoption on financial inclusion, examining how AI-driven solutions improve financial accessibility across economies with varying technological readiness levels. Using panel data from 35 countries between 2017 and 2023, we apply the Two-Stage Least Squares (TSLS) system and the Generalized Method of Moments (GMM) model to analyse the influence of artificial intelligence on financial inclusion indicators. This study underscores the vital role of AI in shaping the future of financial inclusion. The empirical evidence demonstrates that AI adoption enhances financial accessibility by overcoming traditional constraints, optimising risk assessment, and fostering innovation in financial services. The findings show that artificial intelligence adoption substantially and concretely impacts enhancing financial accessibility. Specifically, AI-driven solutions reduce barriers to banking services, increase digital financial participation, and expand access to credit, particularly in regions with robust technological infrastructure. Importantly, the positive effects are most significant in economies with supportive institutional and regulatory frameworks, highlighting the role of policy in amplifying artificial intelligence benefits. This study makes a unique contribution by linking artificial intelligence adoption to specific financial inclusion outcomes and highlighting the crucial role of institutional quality in maximising these benefits. The practical implications of these findings are far-reaching for policymakers and financial institutions. They underscore the need for integrated strategies that leverage AI innovations and ensure regulatory safeguards, promoting a more inclusive and sustainable financial ecosystem. These insights provide valuable implications for optimising AI-driven financial inclusion initiatives.