Joint Research Team Conducts a Pioneering Study on Digital Financial Inclusion Using Machine Learning in Palestine

There is growing interest in digital financial inclusion as a key driver of economic development and sustainability, but significant obstacles still limit its adoption, particularly in conflict-affected environments and developing countries such as Palestine.

In this context, a joint research team from the International University for Science and Technology (IUST), An-Najah National University (Palestine), Damascus University, and Al-Sham Private University conducted a scientific study entitled “Machine Learning Analysis of Digital Financial Inclusion: Identifying Determinants, Barriers, and Sustainability Links.“

The study addresses an important knowledge gap by examining the key determinants and barriers influencing the adoption of digital financial services in this unique environment. The study is among the first to apply machine learning techniques to analyze the determinants of digital financial inclusion in the Palestinian context, which remains underexplored in the academic literature.

The research was based on primary survey data collected from 148 respondents in Jenin Governorate, West Bank.

To address the methodological challenges inherent in the data, the researchers employed L2-penalized (Ridge) logistic regression, a technique that proved effective in reducing model instability and addressing multicollinearity, limitations that often hinder conventional regression models.

This enabled the researchers to identify the key predictors of mobile banking adoption with a high degree of reliability. The findings revealed a clear digital divide.

Although ownership of basic bank accounts is relatively widespread, factors such as reliable mobile internet access, existing banking relationships, male gender, younger age, higher educational attainment, and higher income significantly increase the likelihood of adopting mobile banking services.

Conversely, older age, lower educational attainment, rural residence, female gender, and—interestingly—higher levels of financial literacy based on understanding bank statements were found to constitute significant barriers to mobile banking adoption within the multivariate model.

This finding points to what the researchers describe as the “knowledge paradox,” whereby greater awareness of financial risks may discourage individuals from adopting digital financial technologies.

The study provides valuable empirical evidence specific to the Palestinian context while demonstrating the effectiveness of machine learning techniques in producing reliable insights in complex research settings.

The researchers recommend prioritizing improvements in digital infrastructure, implementing targeted financial literacy and awareness programs, and addressing geographic and demographic disparities to promote digital financial inclusion and support more inclusive and sustainable financial development.