The mechanism effect of digitization on the financialization-economic performance nexus in emerging economies: an empirical analysis using PLS-SEM

Ummar Faruk Saeed (), Awal Sualley and Dawuda Kamal
Additional contact information
Ummar Faruk Saeed: Jiangsu University
Awal Sualley: University for Development Studies
Dawuda Kamal: Tamale Technical University

SN Business & Economics, 2025, vol. 5, issue 9, 1-27

Abstract: Abstract This study investigates the mechanism through which financialization and digital transformation influence economic performance in emerging and transition economies. Using partial least squares structural equation modeling and cross-sectional data from for the year 2022, the analysis examines both the direct impact of financialization on economic development (ED) and the indirect effect mediated by digitalization, measured through ICT access. The findings offer three key insights. First, financialization has a significant positive effect on ED by improving capital mobilization, investment efficiency, and risk allocation. Second, ICT access independently promotes economic performance by enhancing connectivity, productivity, and the accessibility of financial services. Third, ICT access functions as a partial mediator in the relationship between financialization and ED, enhancing the influence of financial systems through digital expansion. The mediation analysis, supported by both the variance accounted for method and the Sobel test, shows that ICT access explains approximately 22.3% of the total effect. This confirms that the mediation is statistically significant yet partial, indicating that while digital infrastructure boosts the developmental benefits of financialization, it serves as a complementary pathway rather than a primary driver. These findings hold important implications for policymakers and development practitioners. They highlight the need for integrated strategies that simultaneously advance financial and digital infrastructure. By emphasizing the complementary role of digital transformation in enhancing the impact of financialization, the study contributes to a more holistic understanding of how to achieve inclusive and sustainable ED in the digital age.

Keywords: Financialization; Digital transformation; Economic growth; Developed economies; Emerging economies; PLS-SEM (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s43546-025-00879-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:snbeco:v:5:y:2025:i:9:d:10.1007_s43546-025-00879-8

Ordering information: This journal article can be ordered from
https://www.springer.com/journal/43546

DOI: 10.1007/s43546-025-00879-8

Access Statistics for this article

SN Business & Economics is currently edited by Gino D'Oca

More articles in SN Business & Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().