Digital finance and economic growth in CEPGL countries: a dynamic analysis using Panel data (2000–2024)

Abstract

The digital transformation of financial systems is one of the major shifts in contemporary economies and is attracting growing interest in developing countries, where shortcomings in traditional banking coexist with the rapid spread of digital technologies. Digital finance is thus likely to improve access to financial services, reduce transaction costs, facilitate payments and enhance the efficiency of financial intermediation. However, its effects on economic growth remain contingent on the quality of digital infrastructure, the level of human capital, the institutional and regulatory environment, and its integration with the financing of productive activity. This article analyses the effect of the development of digital finance on economic growth in the countries of the Economic Community of the Great Lakes Countries (CEPGL) – namely the Democratic Republic of the Congo, Rwanda and Burundi – over the period 2000–2024. The study utilises panel data and a composite index of digital finance development (ISFD), supplemented by variables relating to information and communication technologies (ICT), digital financial education (FinEduDig), public-private partnerships in ICT (PPP_ICT) and the money supply. The econometric strategy is based successively on stationarity tests, Kao’s cointegration test, the estimation of an ARDL panel model, and robustness and causality tests. The results highlight the existence of a long-run relationship between the variables studied, but do not confirm the hypothesis of a positive and statistically significant effect of the development of digital finance on economic growth. The research hypothesis is therefore rejected. This seemingly paradoxical result is, however, qualified by the Dumitrescu-Hurlin causality test, which reveals a unidirectional causality from the development of digital finance towards economic growth, with a probability associated with the Z-bar statistic of 0.0319. The null hypothesis of non-causality is thus rejected at the 5 per cent significance level. These results suggest that digital finance has real potential for economic transformation, but that this potential remains insufficiently translated into aggregate growth in CEPGL countries. The article therefore advocates an integrated policy combining the development of digital and energy infrastructure, financial inclusion, financial and digital literacy, improved regulation, and the channelling of financial innovation towards productive investment.

Keywords: Digital finance; economic growth; ARDL model using panel data; cointegration; causality; CEPGL; financial inclusion.

Received Date: June 19, 2026

Accepted Date: July 10, 2026

Published Date: August 01, 2026

Available Online at: https://www.ijsrisjournal.com/index.php/ojsfiles/article/view/816