Abstract
This study examines the possible influence of digital financial services (DFS) on shaping regional economic development in Russia. Despite the rapid digitalization of financial transactions, significant disparities persist across federal subjects. The study used a balanced panel dataset of 85 Russian regions from 2015 to 2023. It applied fixed-effects, random-effects, and instrumental variable panel regression models, with the Hausman test guiding model selection. DFS penetration and digital payment volume are key explanatory variables, while education, infrastructure, population density, and federal district effects serve as controls. Findings indicate that a 0.1 increase in DFS penetration raises GRP growth by approximately 0.9 percentage points (p < 0.01), reduces unemployment by about 0.3 percentage points (p < 0.05), and increases investment inflows by roughly 1,200 rubles per capita annually (p < 0.01). Developmental effects are strongest in lagging regions like the North Caucasus and Far Eastern districts and weaker in Moscow and the Central district. Results suggest DFS can facilitate inclusive regional growth, especially in less developed areas, if supported by policies enhancing digital infrastructure, education, and access to financing for small and medium-sized enterprises.