FinTech, Financial Inclusion, and Economic Transformation: Evidence from Developing Countries
Year: 2026
Type: article
Abstract: Financial Technology (FinTech) has become an increasingly important driver of financial inclusion and economic transformation in developing economies. By expanding access to digital financial services, improving payment systems, and lowering transaction costs, FinTech has enhanced participation in formal financial markets and created new opportunities for inclusive growth. This study investigates the relationship between FinTech development, financial inclusion, and economic transformation across 40 developing countries over the period 2011–2024. The analysis is based on data obtained from the World Bank’s World Development Indicators (WDI) and Worldwide Governance Indicators (WGI), the International Monetary Fund’s Financial Access Survey (IMF-FAS), and the International Telecommunication Union (ITU). A composite Financial Inclusion Index (FII) is constructed using Principal Component Analysis (PCA) to capture multiple dimensions of access to and usage of financial services. The empirical framework combines descriptive statistics, correlation analysis, fixed-effects and random-effects panel regressions, dynamic Generalized Method of Moments (GMM) estimation, and mediation and moderation analyses to examine the channels through which FinTech influences economic outcomes. The results reveal that trade openness and employment are among the most important determinants of economic growth and per capita income growth in the sampled countries. Financial inclusion and digital financial infrastructure also contribute positively to economic performance by improving access to financial services and increasing the efficiency of financial transactions. However, the impact of FinTech is not uniform across countries. Its effectiveness depends significantly on governance quality, institutional capacity, and macroeconomic stability. The moderation analysis shows that greater financial inclusion weakens the adverse effect of inflation on economic growth, thereby enhancing economic resilience. The findings suggest that financial inclusion serves as an important transmission mechanism through which FinTech contributes to broader economic transformation. The study concludes that FinTech can support inclusive and sustainable development in developing economies when accompanied by effective institutions, stable macroeconomic policies, and continued investment in digital infrastructure. These findings provide important policy insights for governments seeking to leverage digital finance as a tool for economic modernization and broad-based prosperity.
Author: DAVE, Dr. BRIJ BEHARI
Language: English
Subfield: Management Information Systems
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7220354113