Digital financial inclusion business strategies green finance and leadership influence on banking system stability in Somalia

Abstract This study examines the relationship between digital financial inclusion, leadership quality, and banking system stability in Somalia, while keenly focused on leadership's moderating effect. Observing the rapid rise of mobile finance services in vulnerable post-conflict nations inspired a macro-financial approach to finance, institutions, as well as leadership theories. This study investigated the power of mobile money penetration, leadership, and the connection between the two in determining the stability of the banking system between 2019 and 2024 annually. Digital financial inclusion is associated with the stability of the banking system, suggesting that mobile money contributes to stronger financial systems through improved payment efficiencies and the circulation of liquid funds. Most importantly, the relationship between digital financial inclusion and leadership quality is seen to be positive and statistically significant, implying that leadership/governmental oversight strengthens the relationship between digital financial services provision and financial stability. The findings of this paper, therefore, underscore the conditional nature of digital financial innovation. It is expected that this paper will add to the body of literature on digital finance/financial stability, particularly due to the study’s assessment of the experience of a developing country. The conclusions derived from this paper are hugely relevant to economies that are developing very fast. The findings of this paper underscore the necessity of taking an integrated approach that includes the development of digital financial inclusion, leadership, and institutions towards achieving systemic banking stability.