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The Impact of Fintech on Economic Growth: Evidence from China

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  • Na Song

    (School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 610054, China)

  • Isaac Appiah-Otoo

    (School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 610054, China)

Abstract

Financial technology (fintech) has seen fast development recently in China; however, studies exploring the contributions of fintech to China’s economic growth remain limited. Thus, this study motivated by the knowledge gaps and fast expansion of fintech examined: (i) the impact of fintech and the submeasures of third-party payment, credit, and insurance on China’s economic growth; (ii) the regional and provincial impact of fintech on China’s economic growth; (iii) the causality relationships between fintech and economic growth. By using a sample of 31 provinces in China and the instrumental variable generalized method of moments (IV–GMM) technique, the study established the following: (i) fintech and the submeasures of third-party payment, credit, and insurance have a statistically significant positive effect on China’s economic growth. Specifically, a 10% rise in fintech, third-party payment, credit, and insurance raises China’s economic growth by 8%, 4%, 5%, and 16%, respectively; (ii) the eastern region has the highest growth effect of fintech. Moreover, Zhejiang province has the highest growth effect of fintech at the provincial level; (iii) a unidirectional causality exists from third-party payment and credit to economic growth, and economic growth to insurance; a bidirectional causality exists between fintech and economic growth. This article explicitly suggests substantial institutional reforms to promote the healthy development of fintech in China.

Suggested Citation

  • Na Song & Isaac Appiah-Otoo, 2022. "The Impact of Fintech on Economic Growth: Evidence from China," Sustainability, MDPI, vol. 14(10), pages 1-17, May.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:10:p:6211-:d:819685
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    2. Arvind Ashta, 2023. "How Can Fintech Companies Get Involved in the Environment?," Sustainability, MDPI, vol. 15(13), pages 1-18, July.
    3. Appiah-Otoo, Isaac & Chen, Xudong & Ampah, Jeffrey Dankwa, 2023. "Exploring the moderating role of foreign direct investment in the renewable energy and economic growth nexus: Evidence from West Africa," Energy, Elsevier, vol. 281(C).
    4. Phemelo Tamasiga & Helen Onyeaka & El houssin Ouassou, 2022. "Unlocking the Green Economy in African Countries: An Integrated Framework of FinTech as an Enabler of the Transition to Sustainability," Energies, MDPI, vol. 15(22), pages 1-28, November.
    5. Lee, Chien-Chiang & Lou, Runchi & Wang, Fuhao, 2023. "Digital financial inclusion and poverty alleviation: Evidence from the sustainable development of China," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 418-434.
    6. Yingkai Yin & Hongxin Ma & Zhenni Wu & Aobo Yue, 2023. "How Does China Build Its Fintech Strategy? A Perspective of Policy Evolution," Sustainability, MDPI, vol. 15(13), pages 1-21, June.
    7. Yuzhen Ma & Xinyang Wei & Gaoyun Yan & Xiaoyu He, 2023. "The Impact of Fintech Development on Air Pollution," IJERPH, MDPI, vol. 20(4), pages 1-16, February.
    8. Yuling Yuan & Dukangqi Li, 2023. "Urban Economic Efficiency, Environmental Factors, and Digital Finance: Impacts on Sustainable Development in Chinese Cities," Sustainability, MDPI, vol. 15(18), pages 1-22, September.

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