Financial Innovations Effect on Smart Economy Through AI in the Horn of Africa

Abstract

The financial breakthroughs that are developing at a rapid pace, especially in the field of artificial intelligence (AI), have the capacity to drastically alter the economic conditions in the Horn of Africa. This research looks at how financial innovations enabled by AI are influencing the growth of a smart economy in the Horn of Africa. A poll was conducted with 400 participants, comprising financial service providers, legislators, and technological specialists. To find the underlying dimensions, exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) were used. The data's appropriateness for factor analysis was evaluated using Bartlett's test of sphericity and the Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy. The mediating impact of AI-driven financial innovations in the link among the identified determinants and the emergence of a smart economy in the Horn of Africa was then investigated using structural equation modeling (SEM). The study's conclusions provide directions on how to best utilize AI-powered financial innovations for Horn of Africa.