Fueling Financial Development: The Crucial Role of Generative AI Financing Across Nations

This study examines the impact of Generative AI (GAI) financing on financial development (FD) across 21 countries using cross-sectional data from 2020 to 2022. Employing both simple linear regression and two-stage least squares (2SLS) to address endogeneity, we find that GAI financing significantly contributes to financial development, with stronger effects observed in Asian and non-European regions. Regional heterogeneity is evident, highlighting varying impacts across different subcontinents. Policy implications suggest promoting GAI ecosystems, attracting foreign investment, and enhancing publicity for GAI startups. The study highlights the need for future research on the ethical implications and dynamic effects of GAI financing.