Promise (Un)kept? Fintech and Financial Inclusion

Promise (Un)kept? Fintech and Financial Inclusion
READ MORE...
Volume/Issue: Volume 2024 Issue 131
Publication date: June 2024
ISBN: 9798400279195
$20.00
Add to Cart by clicking price of the language and format you'd like to purchase
Available Languages and Formats
paperback else
pdf else
epub else
English
Prices in red indicate formats that are not yet available but are forthcoming.
Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Finance , Fintech , financial innovation , financial inclusion , capital raising , ownership of account , rapid growth of fintech , marketplace lending , balance sheet lending , Digital financial services , Financial sector development , Global

Summary

The emergence of financial technologies—fintech—has become an engine of change, promising to expand access to financial services and give a boost to financial inclusion. The ownership of accounts in formal financial institutions increased from 51 percent of the world’s adult population in 2011 to 76 percent in 2021, but there is still significant variation across countries. So has the rapid growth of fintech delivered the promise of broadening financial services to the under-served populations? In this paper, I use a comprehensive dataset to investigate the relationship between fintech and financial inclusion in a panel of 84 countries over the period 2012–2020 and obtain interesting empirical insights. First, the magnitude and statistical significance of fintech on financial inclusion varies according to the type of instrument. While digital lending has a significant negative effect on financial inclusion, digital capital raising is statistically insignificant. Second, the overall impact of fintech is also statistically insignificant for the full sample, but becomes positive and statistically highly significant in developing countries. Policymakers need to develop an adequate regulatory framework that balances fostering innovation and ensuring equitable treatment of individuals and groups. This requires better financial education, strong regulatory institutions, and well-calibrated prudential regulations for a level playing field and effective supervision.