Analysis of the Impact of Digital Financial Services on Enhancing Financial Inclusion in Iraq within the Framework of Financial Digital Transformation

Abstract

This study aims to analyze the impact of digital financial services on enhancing financial inclusion in Iraq within the framework of financial digital transformation. It examines the relationship between digital service indicators and financial inclusion and tests their effects in both the short and long run. The study adopts an econometric methodology using the Autoregressive Distributed Lag (ARDL) model based on monthly data covering the period (2020–2024). The results reveal a positive and statistically significant impact of digital financial service indicators on financial inclusion in both the short and long term. Electronic payments contribute to the transition from a cash-based economy to a cashless system and enhance credit capacity through the accumulation of financial data. Mobile money transfers serve as an effective channel for integrating financially excluded groups and expanding access to finance, while the spread of electronic wallets broadens the user base and reduces access gaps. The findings confirm that financial digital transformation constitutes a key driver for deepening financial intermediation in the Iraqi economy.