From Digital Financial Inclusion to Human Development in ASEAN: The Mediating Role of Sustainability Performance

Abstract

Digital financial inclusion has become increasingly important for sustainable development, yet how it contributes to human development remains less clear, particularly in ASEAN economies. This study examines whether sustainability performance (ESG) mediates the relationship between digital financial inclusion and human development. Using panel data from eight ASEAN countries over 2015–2024, the study constructs a multidimensional Digital Financial Services Index (DFSI) and applies fixed-effects regression models selected through the Hausman test. The results show that digital financial inclusion has a positive and significant effect on ESG performance, while traditional financial development measures, including financial access and financial depth, are not significant. ESG performance is positively associated with human development. The mediation analysis further shows that the indirect effect of digital financial inclusion on human development through ESG is positive and statistically significant. In contrast, the direct effect becomes insignificant once ESG is included. These findings suggest that digital finance contributes to human development mainly through stronger sustainability performance. The study highlights the importance of developing digital financial systems that support both sustainability objectives and broader human development outcomes.