Assessing the Role of Digital Finance on Shadow Economy and Financial Instability: An Empirical Analysis of Selected South Asian Countries

The advancement in fintech technological development emerging countries has accelerated the role of digital finance economic development. Digital assists financial inclusion; however, it may also increase chances instability due to systematic risks. Emerging are clutches shadow growth, which reduces taxable income revenue and creates pressure on inclusion prospects. current study attempts measure impact growth stability among selected South Asian countries. We have used CUP-FM CUP-BC estimation methods above relationship two model frameworks from 2004 2018, with former measuring influence economy latter examining between stability. In addition, second-generation unit root test, Westerlund cointegration analysis employed confirm stationarity variables. result Westerlund’s confirms a long explanatory outcome Furthermore, long-run results conclude that an helps reducing sample However, increases likelihood risks instability. reveals control variables like unemployment industrial productivity significant economy. findings will assist readers comprehending how influences promotes nations.