The Asymmetric Impact of Fintech Innovation on Financial Inclusion and Economic Growth: A Cross-Country Panel Data Analysis

Abstract

This article examines the effect of digital financial inclusion (DFI) on sustainable economic development in emerging markets. Using a panel dataset covering the period 2010-2023, we use the System Generalized Method of Moments (GMM) estimation method to deal with possible endogeneity issues. We find evidence of strong positive association between DFI, as captured by mobile money penetration and use of internet banking, and sustainable economic development, as represented by GDP per capita growth as well as by environmental performance indicators. The findings indicate that DFI allows for easier access to financial services, stimulates entrepreneurship, improves resource allocation efficiency, and encourages environmentally friendly practices. This research adds to the literature on the potential for fintech to bring about inclusive and sustainable development, offering insights useful to policymakers in emerging economies wishing to harness the power of digital technologies to bring about economic development and a safe environment.