Leveraging Digital Microfinance for Inclusive Banking Efficiency: A Post-Financial Inclusion Assessment Across BRICS Economies

Abstract

Over the last few years, there has been a large amount of academic and policy focus on how digital microfinance has transformed financial inclusion in banking efficiency. In this study, we examine digital microfinance mechanisms such as mobile banking, AI-driven microlending, and blockchain transactions, to improve the performance of banking in BRICS economies in the wake of financial inclusion. Using panel data from the years 2012 to 2024, the research integrates the analysis of key company performance indicators such as Return on Equity and Net Interest Margin. We find preliminary results that indicate that those economies exhibiting stable inflation and moderate GDP growth (China and India are among them) exhibit a more pronounced positive relationship between digital microfinance uptake and banking efficiency. Panel data regression using Fixed and Random Effects Models and Granger causality tests are included in the methodology. The strength of these relationships is moderated by economic volatility, according to findings. Study conclude that digital microfinance tools is not only inclusion enabler, rather also acts for boosting efficiency, if country macroeconomic and regulatory policies and correctly adopted. Further, study asks policy makers that digital infrastructure be strengthened, consumer needs to be educated regarding financial literacy, and for doing so central banks and regulators must play their watch guard role of oversighting which will ensure improving efficiency without increasing financial risks.

Conflict of Interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Funding

The research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors.

Data Fabrication/Falsification Statement

The author(s) declare that no data have been fabricated, falsified, or manipulated in this study.

Participant Consent

This study is based on secondary data obtained from publicly available sources and did not involve any human participants. Therefore, no participant consent was required, and all data were used in accordance with ethical standards for secondary data research.

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