Abstract
<jats:p>The rapid diffusion of decentralized finance (DeFi) protocols across emerging econo-mies raises two related policy questions: whether these platforms broaden access to fi-nancial services and whether their expansion affects incumbent commercial banks. Us-ing an unbalanced panel of ten BRICS Plus economies (2015–2024), we estimate four complementary specifications—two-way fixed effects, system GMM, structural equa-tion modelling with mediation, and panel smooth transition regression—to investigate the DeFi–inclusion–stability nexus. Estimators yield mixed evidence on the DeFi–inclusion link: fixed effects and SEM specifications produce positive but non-significant coefficients, while system GMM yields a small negative estimate once path dependence is absorbed. The direct association between DeFi adoption and non-performing loans is negative and robust across all specifications once multicollinearity between the two Chainalysis indicators is remedied. The PSTR suggests a possible threshold on the Fi-nancial Inclusion Index at ĉ ≈ 0.641, with the DeFi–Z-score association switching from negative below the threshold to positive above it. However, we cannot reject the null hypothesis of linearity at conventional 5% significance (p = 0.057), bootstrap confidence intervals for the regime slopes are wide and straddle zero, and Monte Carlo simulations confirm limited statistical power. Alternative transition variables yield mixed results, suggesting the threshold reflects broader financial development rather than inclusion specifically. The findings are best interpreted as pattern evidence from methodological triangulation rather than definitive causal identification. Given the borderline statisti-cal evidence, we offer policy observations as directional hypotheses for future research rather than definitive prescriptions.</jats:p>