Impact of income, poverty, and artificial intelligence on financial inclusion

Abstract

Purpose As artificial intelligence (AI) is taking over our world, this study aim to examine the relationship between AI readiness and financial inclusion in low and lower middle- income countries. Design/methodology/approach In this study, a balanced panel data for 71 countries over the period from 2019 to 2024 and the generalised method of moments was used. Findings Using the generalised method of moments, the results revealed that AI readiness is negatively associated with financial inclusion, suggesting a lower extent of financial inclusion. In addition, this study conducted a robustness check by dividing the countries into low-income and lower-middle-income countries and by using alternative indicators of financial inclusion. Interestingly, robustness checks provide further support for the finding that AI readiness is positively associated with financial inclusion in lower middle-income countries, while the negative impact persists in low-income countries. Research limitations/implications Thus, this study offers insights for policymakers that strategies for strengthening AI-enabling capacity and promoting inclusive AI-enabled financial services need to be aligned with and appropriate to the country’s income level. Originality/value Unlike much of the existing research, which primarily focuses on high-income or more digitally advanced economies, this study examines the relationship between AI readiness and financial inclusion in low- and lower-middle-income countries. By focusing on these economies, this study provides new insights for scholars and policymakers into how AI readiness may influence financial inclusion as AI technologies become increasingly integrated into financial services, not only in advanced economies but also in developing contexts.