The Future of Public Financial Management in the Digital Era: How AI and Blockchain Are Reshaping Government Accountability and Transparency

Abstract

Purpose: This study examines how artificial intelligence (AI) and blockchain technologies transform public financial management (PFM) by enhancing government accountability, transparency, fraud detection, fiscal efficiency, and real-time financial oversight.

Methods: A systematic literature review, secondary data analysis, and statistical modeling were utilized to evaluate global AI and blockchain adoption trends from 2020 to 2024. Regression analysis, chi-square tests, and ANOVA were applied to assess the impact of these technologies on fraud reduction, financial transparency, and cost savings.

Findings: Regression analysis revealed a strong correlation (R² = 0.999) between AI adoption and fraud reduction, with approximately 500 fewer fraud cases per 10% increase in AI use. Blockchain significantly improved transparency (χ² = 18.72, p < 0.05), reducing financial mismanagement by 30%. ANOVA confirmed that AI and blockchain implementations increased public sector savings from $0.5 billion in 2020 to $3.2 billion in 2024.

Value: The study highlights the critical role of clear regulatory frameworks, digital infrastructure investment, and workforce training in overcoming implementation challenges. It provides a strategic roadmap for policymakers, underscoring the importance of phased AI-blockchain integration and stakeholder engagement to modernize PFM systems effectively.

Type of Paper: Empirical Research using secondary data.