The impact of Digital Finance on Financial St...

The impact of Digital Finance on Financial Stability

Author Name : Fatima Zohra Zaakoun

ABSTRACT This study investigates the impact of digital finance on financial stability across five countries: France, Norway, Greece, Albania, and Turkey, between 2007 and 2021. To analyze the data, we utilized panel data regression models, including Pooled Ordinary Least Squares (POLS), Fixed Effects (FE), and Random Effects (RE) estimations. These methodologies offer several advantages, such as accommodating dynamic panel models, controlling for heteroscedasticity, addressing potential endogeneity, and managing autocorrelation within the panel data. Our empirical analysis reveals that certain predictor variables, such as mobile banking penetration and fintech investment, have a statistically significant effect on financial stability. This indicates that digital finance, measured through various indicators like mobile banking users, online transactions, and blockchain adoption, substantially influences financial stability in the studied countries. The main objectives of this research have been achieved. The empirical findings demonstrate a statistically positive relationship between digital finance and financial stability. The results suggest that digital finance should be a priority on the policy agenda in the coming years, with governments and financial institutions leveraging these insights to develop appropriate financial development strategies. Enhancing the regulatory structure and boosting financial stability is crucial for fostering a resilient financial system in these diverse economic contexts.