FINTECH ADOPTION AND FINANCIAL INCLUSION: IMPLICATIONS FOR BANKING INSTITUTIONS IN DEVELOPING ECONOMIES
Keywords:
FinTech Adoption, Financial Inclusion, Digital Banking, Regulatory Quality, Developing EconomiesAbstract
This study examines the relationship between FinTech adoption and financial inclusion and evaluates its implications forbanking institutions in developing economies. Using a balanced panel dataset of 95 banks across 20 developing countriesover the period2015–2021,the study employs fixed effects regression techniques to assess the impact of bank-level digitaladoption on financial inclusion indicators. The findings reveal that higher levels of FinTech adoption significantlyenhance financial inclusion, as reflected in increased access to formal financial services and reduced financial exclusion.The results remain robust after controlling for bank-specific characteristics, macroeconomic conditions, and institutionalfactors. Furthermore, the analysis demonstrates that regulatory quality and post-digital reform environments strengthenthe positive effect of FinTech adoption on inclusion outcomes, indicating that supportive institutional frameworks amplifythe developmental benefits of digital transformation. Regional heterogeneity analysis shows that the magnitude of theFinTech–inclusion relationship varies across regions, with particularly strong effects observed in Sub-Saharan Africa andSoutheast Asia. The findings suggest that FinTech operates as a complementary mechanism within traditional bankingstructures, improving outreach and service efficiency rather than displacing conventional financial intermediation.Overall, the study provides empirical evidence that technological innovation, when supported by appropriate regulatoryand infrastructural conditions, can serve as an effective pathway for advancing inclusive financial development in developing economies.
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