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American Journal of  Economics and 
Business Innovation (AJEBI)

Realities of  Digital Technology Adoption Impacts on the Financial Sectors of  
Developing Economies

Joseph Asare1*, Joseph Akwasi Nkyi1, Stephen Owusu Afriyie1, Gertrude Amoakohene1

Volume 4 Issue 3, Year 2025
ISSN: 2831-5588 (Online), 2832-4862 (Print)

DOI: https://doi.org/10.54536/ajebi.v4i3.4721
https://journals.e-palli.com/home/index.php/ajebi

Article Information ABSTRACT

Received: March 12, 2025

Accepted: April 16, 2025

Published: October 11, 2025

The advancement of  digital technology in the financial sector has changed operations, 
with developing economies witnessing a huge impact of  the rapid advancement of  digital 
technology in the financial sector. However, not much literature on the old and new realities 
of  digital financial technology on the financial sector of  developing economies exist. This 
study is conducted to provide an understanding of  the old and new realities of  digital 
technology advancements impacts on developing economies financial sectors. The study 
employs both qualitative and quantitative research methods. Five (N-5) commercial financial 
institutions in Ghana made up of  400 samples were selected, and bootstrapping was carried 
out, weighing every 400 cases (the critical value taken was t = 1.95 and a p-value <0.05) to 
guarantee the statistical weight of  the SartPLS. The reliability of  the indicators was assessed 
by the statistical significance of  the standardized factorial loadings. The outer loadings were 
in the range of  0.40 to 0.60 should be excluded, and the evaluation should be higher than 
0.70, indicating a compounded reliability increase. The compound reliability is the alternative 
to Cronbach’s alpha, and as a common rule, the score obtained should be expected to be 
higher than 0.70. The study results showed that government’s continuous dominance in the 
financial sector of  developing economies remain strong. Also, leveraging digital technology 
would capacitate developing economies to take advantage of  opportunities in the global 
financial market to achieve a guarantee sustainable financial sector growth and development.

Keywords
Developing Economies, Digital 
Finance, Digital Technology, 
Financial Sector, Government 
Policy

1 Department of  Acccounting, Banking and Finance, Ghana Communication Technology University, Ghana
* Corresponding author’s e-mail: jasare@gctu.edu.gh

INTRODUCTION 
The advancement of  digital technology in the finance 
sector and enhanced the financial knowledge of  
customers and users of  financial information and 
products (OECD, 2020). Among the digital technology 
innovations that have dominated the financial sector of  
developing economies is digital payment, which helps 
to promote financial inclusion and financial wellbeing. 
Digital technology also affects all aspects of  economic 
activity and demands economic rethinking to promote 
the use of  contactless and digital payments (Optimus, 
2022). Also, digital savings are gaining momentum in the 
financial sector of  developing economies. Governments 
of  developing economies are constantly seeking to 
promote access to the internet and technology (mobile 
phones, etc.) to assist in the provision of  digital financial 
services to promote financial inclusion and the delivery of  
low-priced financial services to help bring the poor into 
the formal economy (Ozili, 2018). Also, scholars most 
including Sun et al. (2023), and McKnight et al. (2020) 
have indicated that the current advancement of  digital 
technology in the financial sector is promoting, financial 
wellbeing, digital financial literacy, digital credit, and 
digital financial resilience. Digital technology dominates 
the financial sector of  developed economies (Xu et al., 
2024). However, developing economies have equally 
witnessed a rapid advancement of  digital technology 
in the financial sector, therefor this study believes 
that gaining an understanding of  digital technology 

advancements in developing economies financial sectors 
is very crucial (Yassine et al. 2024; Arizala et al. (2021). 
Accordingly, David (2018) indicated that a common 
feature of  developing economies including Ghana is high 
potential for growth, high market volatility, low-middle 
income per capita, investment potential, low capacity 
to maintain sustained strong growth and production of  
higher-value-added goods.
Ghana is touted as one of  the world’s leading developing 
economies, with a population of  over 24 million, 
and is considered the centre of  Africa’s struggle for 
independence in the 1950s (Nambware, 2023). Ghana’s 
financial sector development stems from the 1950s. 
Before 1985, the financial system in Ghana changed and 
grew invariably because of  the creation of  specialized 
financial institutions by the government as an intervention 
to serve the officially perceived demands of  distinct 
economic groups. In 1953, the Ghana Commercial Bank 
was established to complement what was regarded as the 
inadequate lending policies of  the two earlier established 
foreign financial institutions, whose focus was to provide 
financial services to well-established foreign firms in the 
granting of  loans. Unfortunately, indigenous farmers and 
small entrepreneurs were not the priority of  those foreign 
financial institutions, hence the government decision to 
set up a national bank considered to be economically 
desirable (Aryeetey, 1996). Also, various development 
financial institutions, including the National Investment 
Bank, the Bank for Housing and Construction, and the 



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Agricultural Development Bank, were set up to meet 
the specific financing needs of  some sectors between 
the 1960s and 1970s. However, in the 1970s, Co-
operative Bank, Credit Bank, Social Unit Rural Bank, and 
National Savings Security Bank were also created by the 
government as small borrowers grew. By 1990, a formal 
financial system had been created in Ghana, comprising 
the central bank (Bank of  Ghana), three development 
financial institutions, and four commercial financial 
institutions. In addition, cooperative movements, Post 
Office Savings Bank, and about 124 rural financial 
institutions were recorded in Ghana (Aryeetey et al., 1993; 
Bank of  Ghana, 1994). 
The financial services sector in Ghana is comprised mainly 
of  the insurance, banking, and capital markets. The sector 
is regulated by four major regulatory bodies: the Bank 
of  Ghana (BoG), the National Insurance Commission 
(NIC), the National Pensions Regulatory Authority 
(NPRA), and the Securities and Exchange Commission 
(SEC). The financial sector of  Ghana is dominated by 
financial institutions, and the sector is well-structured and 
has promoted development, steady reforms, and growth. 
However, there are inherent risks in the operations of  
financial institutions, in the structure of  their balance 
sheets, and in their profit and loss accounts. For instance, 
commercial financial institutions in Ghana are highly 
exposed to credit risk because lending accounts for the 
bulk of  their assets, and it has grown in an environment of  
weak credit risk management and enforcement of  creditor 
rights. Also, governments dominate economic activity, 
causing weakness in fiscal management and an increase in 
vulnerabilities in the banking sector. Additionally, small and 
medium enterprises (SMEs) rely heavily on business from 
the government, leading to the accumulation of  payment 
arrears to contractors and other service providers by the 
government, which affects the capacity of  borrowers to 
service their bank loans. Also, the share of  the market 
of  the five largest financial institutions declined from 61 
percent at the end of  2005 to 46 percent at the end of  
2010 (IMF, 2011; Nambware, 2023).
Typically, financial institutions dominate the financial 
systems in developing economies, and bank deposits 
constitute the most important form of  household savings, 
whereas bank credits such as short- and long-term loans 
are the most important external source of  financing for 
businesses (Weisbrod, 1995). In addition, the financial 
systems of  developing economies tend to exhibit greater 
fragility than those of  developed economies. Not only 
does this fragility affect the overall performance of  the 
economy, but it also causes microeconomic inefficiencies 
in savings and investment and subsequently limits 
economic growth. In addition, the fragility of  the financial 
sector also affects the effectiveness and efficiency of  
the functioning of  the payments system, which leads to 
high transaction costs and reduced capital productivity, 
which has the potential to deepen a macroeconomic 
crisis (Zahler, 1999). However, this study had expected 
the current digital technology evolutions in the financial 

sector of  developing economies to overcome the 
many challenges that affected the sector in the 1990s. 
Unfortunately, this is not the case, as USDT (2023) 
has noted that the financial sector of  most developing 
economies, especially those in sub-Saharan African 
countries, faces many challenges, including operating 
with a strong degree of  government ownership or 
control, weak bank supervision, inadequate enforcement 
tools, low management standards, and inadequate 
financial market size. In addition, the financial sector 
of  the emerging economy is faced with the challenge of  
adopting digital technology, low levels of  formal financial 
services, low financial literacy, and poorly developed 
technology (ILO, 2022). Further, the IMF (2011) 
noted that there are inherent risks in the operations of  
financial institutions due to their exposure to high credit 
risk. Also, governments dominate economic activity 
in the financial sector of  most developing economies, 
creating weaknesses in fiscal management and increasing 
vulnerabilities in the banking sector. Additionally, the 
financial sector of  most developing economies tends 
to suffer heavily in times of  unfavourable government 
economic reform policies. According to Ahinsah-Wobil 
(2023), the 2022 financial statements of  the majority of  
financial institutions in Ghana recorded losses, causing 
much concern and speculation about the future of  
these financial institutions in the coming years. This is 
believed to be the cause of  the Domestic Debt Exchange 
Programme (DDEP) of  the Ghana government, 
which has impacted negatively on their profitability 
position. The DDEP program was introduced in 2022 
to manage the country’s domestic debt. It is in line with 
the identified features of  the financial sector of  the 
developing economies that this study is conducted to 
provide a deeper understanding of  the characteristics of  
the financial sector of  the emerging market. To achieve 
this, the study establishes the old and new realities of  
the financial sector of  developing economies, analyzes 
technology impacts on the financial sector of  emerging 
markets, and develops a model on how capitalizing on 
technology can help developing economies grow their 
financial sector and promote financial inclusion. 

LITERATURE REVIEW
Technology evolution in the financial sector of  most 
developing economies has brought about a complete 
paradigm shift in the functioning, product development, 
and service delivery. Formally, customers needing 
financial services or products from financial institutions 
in developing economies were required to visit the bank. 
Presently, technology is not only an enabler but also a 
service driver. The rapid growth of  mobile phones, 
telecommunications, and the internet has added a new 
dimension to the financial sector of  emerging markets. 
According to Mohideen et al. (2018), technology has 
transformed the global economy, making it easier 
to transfer knowledge, allowing emerging markets, 
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developed economies, and giving developing economies 
a competitive advantage. Mohideen et al. (2018) further 
noted that technology has moved from being a challenge 
to being a critical enabler that presents opportunities to 
address the challenges that many industries face, creating 
the opportunity to and the ability to work in real-time, 
at scale, and at near-zero marginal cost. Also, global 
connectivity has been digital technology advancement. In 
addition, most developing economies in African has over 
73% of  its population using mobile phones to perform 
over 300 million financial transactions daily (OECE, 
2022). However, there fear is that digital technology could 
heighten existing inequalities in developing economies 
(OECD, 2021). 
Although digital technology advancement has changed 
activities in the financial sector, its core activities and 
objective have not changed (Bernanke, 2013). Through 
the financial sector, developing economies can informally 
or formally shift or spread the financial consequences 
of  specific risks from one party to another by enabling 
governments, communities, households, and enterprises 
to obtain resources from the other party when the need 
arises in exchange for social or financial benefits (UNDRR, 
2017). Additionally, the financial sector promotes value 
exchange in developing economies through the provision 
of  a safe and efficient payment system, which is essential 
to supporting the day-to-day economic activities of  all 
developing economies. In 2020 alone, Ghana recorded 
approximately over $4697 million in direct credit 
transactions, including transactions in financial assets, 
non-cash, and cash payments (BoG, 2020). Ensuring the 
liquidity of  developing economies is very crucial, and this 
can only be achieved through an efficient financial market 
system. It is important to note that the financial sector is 
the major provider of  liquidity to businesses, individuals, 
and governments and helps to convert assets into cash 
without undue loss of  value (RBoA, 2014). 
Understanding the financial sector of  developing 
economies is very important in this study. The financial 
sector of  developing economies is considered the set 
of  instruments, institutions, markets, and the legal 
and regulatory framework that allows for transactions 
to be made by extending credit (World Bank, 2016). 
Fundamentally, the financial sector plays a key role in every 
economy, especially developing economies, by promoting 
economic growth and improvement in macroeconomic 
conditions by providing financial services, promoting 
foreign direct investment, and conserving financial 
stability (Saíd, 1994). However, according to López et al. 
(2012), developing economies tend to experience rapid 
growth but show signs of  volatility, including those of  
African, certain Asian, and Latin American countries. In 
addition, the financial sector of  developing economies is 
experiencing cutting-edge technologies such as artificial 
intelligence and machine learning, as well as the rapid 
expansion of  FinTech and BigTech that has accelerated 
the digitalization of  financial services. These cutting-
edge technologies have affected three areas of  the 

financial sector: disruption of  payment systems due to 
the emergence of  digital currencies, with a particular 
focus on central bank digital currency; electronification 
of  securities trading and its effect on trading costs and 
market quality; and the benefits and risks of  the use 
of  massive data for the provision of  financial services 
(Xavier, 2022). 
However, the significant role of  digital technology in 
aiding developing economies to deal with the volatile 
nature of  their financial sector cannot be overemphasized. 
ILO (2022) believes that promoting technology in the 
finance sector, such as the use of  digital finance, creates 
opportunities to develop better financial products and 
banking services for consumers, including new ways of  
channeling funding to businesses, promotes financial 
inclusion, supports economic recovery, and enables 
structural improvement and the transition towards a 
green economy. Also, Ravikumar et al. (2022) noted that 
digital technology foster collective financial inclusion and 
promote all-inclusive financial access. While analysing 
the significance of  digital technology in the financial 
sector, it is important to note many different contexts 
providing new innovative products and services using 
contemporary technologies characterise the rapid growth 
of  financial technology. This has led to the widely 
directions and magnitudes of  the services and products 
delivered by fintech firms (Alt et al., 2018). Whereas are 
some scholars focus on the diffusion and adoption of  
fintech products and services others tend to focus on 
what happens behind scenes. However, none of  these 
seemingly odds can change what lies beneath the magic 
of  financial technology innovations, if  anything, it would 
only deepen understanding, impact, appreciation and 
educate us on technological developments (Dranev et al., 
2019). 
Through empirical observation, digital financial 
technology comprises of  different levels. Pousttchi 
et al. (2018) noted that a change financial technology 
induces impacts that focus on internal business processes 
through to adopting a customer-centric perspective in a 
business organization. Also, business network level of  
financial technology tends to focus more on business 
networked with specialized external partners and 
induces competition that are more intense with lower 
margin. Coupled with the global traditional financial 
services sector, the financial technology competitive 
landscape includes lateral entrants and new start-ups, 
which feature distinct corporate cultures other than 
traditional financial services institutions (Gomber et al. 
2017; Gimpel et al. 2018). With regards to the external 
organization level, government regulation on financial 
technology changes from varying impacts and stages 
including less supervision, lower equity compliance, and 
extreme protection from national legislation towards 
severer rules for held equity, less protection offered by 
national laws, and more supervision on world-wide level 
(Arner et al., 2017). Digital infrastructure widespread 
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moving towards cashless societies and working on a 
fully decentralized basis on payments, financing, and 
investment activities. The relevance of  regulatory and 
compliance issues in the financial industry necessitates a 
combination of  regulation and technology to prescribe 
the application and use of  technology in reporting, 
monitoring, and regulatory (Deloitte, 2016). To highlight 
the traditional banking business within the current digital 
financial technology era, some scholars have resorted to 

using the term Bank Technology (Schwab & Guibaud, 
2016). However, despite the technologies and innovations 
happening in the financial sector, it admittedly that the old 
and new realities of  financial technology impacts on the 
financial sector of  developing economies have not gained 
broad attention. In this regard this study appreciates the 
need to explore the topic to promote sustainable financial 
sector growth and development through digital financial 
technologies as shown in the model in Figure 1. 

Figure 1: Sustainable Financial sector growth and development
Source: adopted from Asare et al. (2023).

Figure 1 above presents the conceptual framework of  the 
study, which shows the interconnection between the old 
and new realities of  the financial sector of  developing 
economies and the impact of  technological evolution on 
the financial sector of  emerging markets. 

MATERIALS AND METHODS
Most authors have applied quantitative and qualitative 
research method and survey to analyse the impact of  
technological on the financial sector of  developing 
economies (Zhu et al., 2023; Akomea-Frimpong et al., 
2022; Appiahene et al., 2019). A qualitative study by PwC 
(2023) showed that financial institutions that adapt digital 
technology experience significant profitability and can take 
advantage both favourable and unfavourable economic 
conditions. However, using only quantitative methods to 
assess digital technological impact on the financial sector 
can be describe as parametric as it lacks the ability to 
provide qualitative insights (Turner, 2000). In addition, 
the SmartPLS was used indicate the linkages between the 
characteristics digital technologies and financial sector. 
A simple random sampling was used to select five (N-
5) commercial financial institutions (Ghana Commercial 
Bank (GCB), Agriculture Development Bank (ADB), 

National Investment Bank (NIB), Absa Bank, and Fidelity 
Bank) that dominate the financial sector of  the Ghanaian 
market. These financial institutions were chosen because 
their share characteristic is a representation of  all the other 
financial institutions in Ghana, and they also dominate 
the financial sector of  Ghana’s emerging market. The 
study observed that the factors and variables identified 
and used to develop the model in Figure 1 are typical 
features of  the selected financial institutions. Although 
these factors were identified through a literature review, 
they turned out to be the realities of  the selected financial 
institution after analysis of  the survey responses received 
from those financial institutions.

RESULTS AND DISCUSSIONS
The model in Figure 1 is based on Smart PLS 3.0 modeling 
to allow for molds about data distributions (Ringle et al., 
2015). According to Richter et al. (2016), for suitability in 
the analysis of  various factors, it is adequate to estimate 
the constructs of  hidden variables in paths created in 
models. Also, the aims of  the study are supported by a 
model to help in determining the new and old realities of  
the financial sector in developing economies by explaining 
the variance of  the constructs. 400 samples were selected, 



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Table 1: Correlation results of  Developing Economies Variables
Variables 1 2 3 4 5 6 7 8 9 10 11 12

Control
1 Government Policies 0.72
2 Private-foreign Investors 0.11 0.10
3 Security and 

Enforcement tools
0.14 0.13 0.16

Predictors
4 Financial Products and 

Services
0.17 0.01 0.18 0.73

5 Technology 0.13 0.11 0.21 0.22 0.77
6 Medium of  transacting 0.041 -0.03 0.93 0.02 0.08 0.66
7 Supervision and Control 0.42 -0.02 0.33 0.20 0.14 0.72 0.80
8 Market size and focus 0.38 0.03 0.32 0.40 0.34 0.18 0.41 0.82
Results
9 Digital financial products 0.37 -0.11 0.34 0.23 0.29 0.16 0.43 0.69 0.78
10 Global Reach/Market 0.24 0.21 0.39 0.20 0.14 0.82 0.37 0.78 0.82 0.98
11 Financial Self- service / 

inclusion
0.37 0.37 0.41 0.27 0.23 0.18 0.40 0.79 0.12 0.98 0.94

12 Sustained Market growth 0.35 -0.12 0.45 0.12 0.28 0.28 0.33 0.29 0.51 0.87 0.46 0.98
Note: N = 400 (p < 0.05; p < 0.0). 

and bootstrapping was carried out, weighing every 400 
cases (the critical value taken was t = 1.95 and a p-value 
<0.05) to guarantee the statistical weight of  the SartPLS. 
The latent endogenous variables are obtained from the 
indicators of  the observed item scores. Table 1 shows the 
correlation results. 
The study results show strong associations between 
variable (1 and 2) private-foreign investment and 
government policies This finding confirms the result 
found in the literature that indicates that policies of  
government significantly impact foreign and private 
investment, with favourable policies including economic 
stability, trusted legal frameworks generally aiding more 
investment, while harsh policies in most cases can deter 
investment (Morrissey et al., 2012). Also, the study noted 
that financial inclusion correlation with government 
policy (variable 1 and 11). Similarly, Tran et al. (2023) 
noted that a contrary’s financial inclusion increases 
financial instability and recommends that economies 
must have financial inclusion and monetary policy to 
promote financial stability. In addition, the study results 
indicate that global reach /market has association with 
government policy, that is variables 10 and 1. In the same 
vein literature has shown that trade openness benefits 
country’s business owners’ income as welfare-state policy 
tend to support the income group that is politically 
dominant (Razin, 2022). Also, technology is found to 
correlate with digital financial products variables (5 and 
9). This result of  the study reveals that advancement in 
technology drives digital financial products introduction 
in the financial sector of  developing economies. Similarly, 

Al-Smadi (2023) noted that technology promotes 
electronic financial products and services, including 
payment, investment, insurance, financing, and financial 
information sharing over digital channels. There is a 
significant investment on the introduction of  financial 
technologies in the banking industry in developing 
countries to achieve financial inclusion. Also, digital 
financial products including mobile banking, ATM, and 
POS, are found to have significant positive impact on 
financial inclusion (Menza et al., 2024). 
The study results further noted that medium of  
transaction (variable 3) have strong association with all the 
variables. The includes electronic financial transactions 
methods used to facilitate the transfer of  value including 
credit/debit cards, online banking, mobile wallets, other 
than physical checks or cash. Most common examples of  
medium of  digital transactions are credit/debit, mobile 
wallets, online UPI (unified payments interface) electronic 
funds transfer (EFT), NEFT (national electronic funds 
transfer), IMPS (immediate payment service), Aadhaar 
pay, and prepaid cards (FU, 2023; Razorpay, 2025). 
In addition, the study noted that government policies 
correlate with all the variables. In the same vain Gan et 
al, 2023 highlights that empirical studies have proved that 
the existence of  digital government helps to improves 
natural resource efficiency. Also, the beneficial impacts of  
a digital government is diffused through three channels: 
government efficiency, regional digital infrastructure, 
and regional innovation and green innovation levels. In 
addition, empirical studies posit that government policy 
on financial technology encompasses inclusion - utilizing 



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digital technologies to limit financial access gaps and 
ensure all are included. Openness and interoperability 
– government policies should support data generation, 
exchange across sectors, and sharing. Also, support for 
entrepreneurship and innovation is very key in growing 
economic value through digitally enabled ventures driven 
by innovation. People-centred development – an economy 
technology policy should ensure that digital services 
are designed to be accessible to all societal segments 
and sectors. In addition, sustainability that ensures a 
balancing in economic growth with environmental and 
social impacts is a key element of  government policy. 
Also, privacy, trust and security that ensures standards 
and protect assets and exchanges are achieved through 
government policy on digital financial technology. 
More importantly, a collaborative regulation that enable 
coherent cross-sector supervision on digital financial 

technology activities is promoted through government 
policy (MoCD, 2024). Moreso, sustained market growth 
factor correlates with all the variables. Similarly, Morshadul 
et al., (2024) noted that financial technology (FinTech) 
leads to enhanced economic growth by supporting 
higher productivity and sustainable growth through 
technological upgrades, diversification, entrepreneurship, 
innovation and creativity. Additionally, FinTech fast-track 
investments in poverty alleviation, and reduce income 
inequality among the poor. However, these attributes of  
financial technology should align with specific sustainable 
development goals of  the government, a demonstration 
that government policy on should support an appropriate 
new technology for financial services development, the 
study noted. The figure 2 below shows the sustained 
market growth model of  a developing economy financial 
sector based on the SmartPLS model. 

Figure 2: Sustained Market Growth Model of  a Developing Economy Financial Sector 
Source: This study.

The reliability of  the indicators was assessed by the 
statistical significance of  the standardized factorial 
loadings. The measurement of  the model was carried 
out based on a common rule. That is, outer loadings 
in the range of  0.40 to 0.60 should be excluded, and 
the evaluation should be higher than 0.70, indicating a 
compounded reliability increase (Terrador-Alcaide et al. 
2020). Further, a measure of  the internal reliability of  
the developed model was also carried out to determine 
whether compound reliability is the alternative to 
Cronbach’s alpha, and as a common rule, the score 
obtained should be expected to be higher than 0.70. 
Figure 2 shows that the results of  the constructs of  the 
developing economies (DE), government policy (DP), 
digital technology (DT), financial system (FS), and ability 
to leverage or maximize digital technology (MDT) exceed 
the minimum requirements to be considered as factors 
that influence the financial sector of  the developing 

economies in achieving sustained financial sector growth 
and development.

Statistical Analysis and Measurement of  The 
Quantitative Factors 
The financial sector of  developing economies plays a 
crucial role in determining overall economic growth 
and development; therefore, measuring the quantitative 
factors that impact the financial sector of  developing 
economies is very important. Under the Financial Sector 
Assessment Program of  the IMF (2021), quantitative 
methodologies were used to assess the financial sector 
of  those economies. The factors used by IMF 2021 in 
their study included the interaction among solvency, 
liquidity, and contagion risks in the banking sector; the 
health of  nonbank financial institutions; the interactions 
with financial institutions and their impact on financial 
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climate change, fintech, and cyber through a survey and 
secondary financial data. Also, Antwi-Asare et al. (2020) 
used surveys and secondary financial data to perform a 
quantitative analysis of  the financial sector of  Ghana. In 
this regard, this qualitative analysis of  the financial sector 
of  the developing economies is based on a survey and 
analysis of  secondary financial data. The demographic 
profile of  the financial institutions that dominate the 
Ghanaian financial sector is shown below. However, 

this study is focused on the Ghana Commercial Bank 
(GCB), Agriculture Development Bank (ADB), National 
Investment Bank (NIB), Absa Bank (Absa), and Fidelity 
Bank Limited (FBL). The demographic profile below also 
shows the proportional percentage of  total assets held by 
these institutions in the Ghanaian financial sector, based 
on categories Q1: hold 50.7% of  total assets, Q2: hold 
22.3% of  total assets, Q3: hold 17.6% of  total assets, and 
Q4: hold 9.4% of  total assets. 

Figure 3: Total assets of  selected financial institutions in Ghana
Source: PwC Ghana Banking Survey (2022)

Figure 4: Pie of  the Percentage of  Total Assets of  Five Major Financial institutions in Ghana
Source: this study

The analysis of  the result above shows that five major 
financial institutions dominate the financial sector of  
Ghana’s developing economies are in the category of  
Q1, with a total holding of  more than half  of  the entire 
market (summation of  Q2 to Q4), that is 50.7%, and 
three of  the financial institutions under this study form’s 
part. GCB had the highest total asset holding of  25.9%, 
followed by Absa with a holding of  17.1% and FBL with 
13.8% total asset holdings. ADB had a total asset holding 
of  7.7% in category Q2, while NIB had 3% in the Q4 

category. From Figure 2 above, this study observed that 
the financial sector of  developing economies is dominated 
by many financial institutions with a smaller percentage 
of  total asset holdings. In addition, the pie chart results 
below show that the percentage of  total assets of  GCB 
and ADB makes them category C1 financial institutions 
in Ghana, with a representation of  52% of  total assets if  
the proportion of  the assets of  all the remaining financial 
institutions under this study is summed up.
This study has observed that out of  the five financial 

institutions analyzed, two financial institutions (GCB 
and ADB) are in the Q1 category and belong to the 
government, with a total asset holding of  52%. This is 
an indication of  the government’s continuous dominance 
in the financial sector of  developing economies and its 

ability to remain strong. 

Heightened Factors have Caused The Current State 
of  The Financial Sector In Emerging Markets 
A further analysis was carried out on the various factors 



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identified through literature as the characteristics of  
the financial sector of  developing economies, which of  
the factors has high dominance in the market. Figure 
5 below shows the results of  the factors with high 
dominance in the market. The results in Figure 4 below 
show that digital technology dominates the factors that 
are currently impacting the financial sector of  emerging 
markets, with a 21.1% score, followed by government 
policy, which had 16.7%, then government dominance 

in economic activities, which had 13.5%, risk inherent in 
bank operations, which had a 12.10% score, and volatility 
in the market, which had a 10.9% score, followed by a 
wider range of  financial products with a 5.8% score. The 
remaining factors had a percentage score of  less than 5% 
significance. These are indications that digital technology, 
government policy, and government dominance are the 
most influential factors in the financial sector of  emerging 
markets.

Figure 5: Factors with high dominance in the financial sector of  developing economies
Source: this study

CONCLUSION
Both new and old realities characterize the financial 
sector developing economies. These realities are affirmed 
in literatures such as Mohideen et al. (2018), OECE 
(2022), the World Bank (2016), López et al. (2012), Xavier 
(2022), and Ravikumar et al. (2022). This affirmation has 
been approved through the developed model in Figure 2 
above, and it also aligns with the findings of  authors such 
as Zhu et al. (2023) and PwC (2023) survey reports, which 
indicate that digital technologies are the surest way for 
sustainable financial sector development in developing 
economies. The bottom line is that government 
dominance and control remain high in the financial 
sector of  developing economies, including dominance 
in major economic activity. However, fully leveraging 
digital technology would capacitate the financial sector 
of  developing economies to take advantage of  all the 
opportunities in the global financial market to achieve 
a guarantee and sustainable financial sector growth and 
development. 

Limitations and Direction for Future Research 
While conducting this study, it is noted that the data used 
for analysis is limited to a specific period, which may not 
be a true representation of  the situation of  the financial 
sector in developing economies in the future. In addition, 

the study could not test how digital technology could 
be used to limit government dominance in the financial 
sector of  developing economies and recommended that 
a future study focus on that.

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