Impact of AI Transformation, Financial Inclusion, and Operational Efficiency on Global Economic Growth: Dynamic GMM Approach

Mohamed  Ali Ali; Hiba  Awad Alla Ali Hussin; Yousif  Saeed Ahmed Amin; Abdelsamie  Eltayeb Tayfor; Zaki  Ahmad

doi:10.48161/qaj.v5n4a1818

Authors

Mohamed Ali Ali Department of Finance, College of Business Administration in Hawtat bani Tamim, Prince Sattam bin Abdulaziz University, Hawtat bani Tamim 11941, Saudi Arabia;
Hiba Awad Alla Ali Hussin Department of Finance, Faculty of Business, Imam Mohammed Ibn Saud Islamic University (IMSIU), Riyadh 11623, Saudi Arabia;
Yousif Saeed Ahmed Amin Department of Business Administration, College of Business, Jouf University, Tabarjal 74766, Saudi Arabia;
Abdelsamie Eltayeb Tayfor Department of Economics, Applied College, King Faisal University, Al-Ahsa 31982, Saudi Arabia;
Zaki Ahmad Islamic Business School, Universiti Utara Malaysia, Kedah, Sintok 06010, Malaysia.

DOI:

https://doi.org/10.48161/qaj.v5n4a1818

Keywords:

AI adoption, financial inclusion, operational efficiency, GDP growth, dynamic GMM. JEL: O33, G21, E44, O11, E61

Abstract

Using system Generalized Method of Moments (GMM) estimation, this study examines how AI adoption, financial inclusion, and operational efficiency affect GDP growth across 89 countries, for the period 2018 - 2023. The results show that GDP growth is positively affected by AI adoption, financial inclusion, quality of governance, and education. Conversely, operational efficiency and systemic financial risk show a negative correlation with economic performance, contrary to common assumption characterizations. These results are robust to a difference GMM approach; additionally, it is revealed that inflation, interest rates and R and D expenditure are bad for GDP indicating that macroeconomic instability, high borrowing cost and inefficient innovation investment hinders growth. Policymakers should promote AI adoption, financial inclusion, good governance, and education while mitigating financial risks, controlling inflation and interest rates, enhancing operational efficiency, and ensuring effective R&D investment to sustain GDP growth and economic stability.

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