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The diffusion of fintech, financial inclusion and income per capita

Author

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  • Désiré Kanga
  • Christine Oughton
  • Laurence Harris
  • Victor Murinde

Abstract

Advances in information and communication technology (ICT) have provided a platform for the introduction and diffusion of a range of financial technologies that have transformed the financial sector. This study analyses the diffusion of financial technology (fintech) and its interaction with financial inclusion and living standards (GDP per capita). We consider the determinants and effects of technology diffusion in financial services and identify two possible transmission mechanisms from the financial sector to GDP per capita – a fintech diffusion channel and a financial inclusion channel. We specify the interactions between these two channels and their relationship with income per capita. Our empirical analysis focuses on the diffusion of two enabling fintech innovations: ATMs and associated digital networks; and mobile phones and payments systems. The relationships between fintech diffusion, financial inclusion and GDP per capita are estimated using a panel data set for up to 137 countries over the period 1991–2015 using both cross section and panel techniques, including an error correction model that distinguishes short- and long-run effects. A key finding is that fintech diffusion and financial inclusion have long-run effects on GDP per capita over and above their short-run impact and the effects of investment in fixed and human capital.

Suggested Citation

  • Désiré Kanga & Christine Oughton & Laurence Harris & Victor Murinde, 2022. "The diffusion of fintech, financial inclusion and income per capita," The European Journal of Finance, Taylor & Francis Journals, vol. 28(1), pages 108-136, January.
    • Handle: RePEc:taf:eurjfi:v:28:y:2022:i:1:p:108-136
    DOI: 10.1080/1351847X.2021.1945646
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    Citations

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    Cited by:

    1. Aurelien K. Yeyouomo & Simplice A. Asongu, 2022. "Fintechs and the financial inclusion gender gap in Sub-Saharan African countries," Working Papers of The Association for Promoting Women in Research and Development in Africa (ASPROWORDA). 22/018, The Association for Promoting Women in Research and Development in Africa (ASPROWORDA).
    2. Rapih, Subroto & Susantiningrum, & Wahyono, Budi & Borges, Jorge Tavares & Phongsounthone, Somesanook, 2023. "Financial openness and fintech credit," Finance Research Letters, Elsevier, vol. 56(C).
    3. Lu, Ling & Liu, Peng & Yu, Jian & Shi, Xunpeng, 2023. "Digital inclusive finance and energy transition towards carbon neutrality: Evidence from Chinese firms," Energy Economics, Elsevier, vol. 127(PB).
    4. 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.
    5. German Blanco & Rajeev K. Goel & Rati Ram, 2023. "What drives the production and diffusion of mobile apps? An international investigation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 828-838, March.
    6. Hodula, Martin, 2023. "Fintech credit, big tech credit and income inequality," Finance Research Letters, Elsevier, vol. 51(C).
    7. Shang, Rui, 2023. "Divide or dividend: How digital finance impacts educational equality," Finance Research Letters, Elsevier, vol. 55(PA).
    8. Wang, Xinyue & Cao, Yuqiang & Feng, Zhuoan & Lu, Meiting & Shan, Yaowen, 2023. "Local FinTech development and stock price crash risk," Finance Research Letters, Elsevier, vol. 53(C).
    9. Ozili, Peterson K, 2023. "Determinants of interest in eNaira and financial inclusion information in Nigeria: role of Fintech, cryptocurrency and central bank digital currency," MPRA Paper 115990, University Library of Munich, Germany.
    10. Ozili, Peterson K, 2023. "Determinants of interest in eNaira and financial inclusion information in Nigeria: role of Fintech, cryptocurrency and central bank digital currency," MPRA Paper 116405, University Library of Munich, Germany.
    11. Inese Mavlutova & Aivars Spilbergs & Atis Verdenhofs & Andris Natrins & Ilja Arefjevs & Tatjana Volkova, 2022. "Digital Transformation as a Driver of the Financial Sector Sustainable Development: An Impact on Financial Inclusion and Operational Efficiency," Sustainability, MDPI, vol. 15(1), pages 1-24, December.
    12. Zhao, Congyu & Jia, Rongwen & Dong, Kangyin, 2023. "Does financial inclusion achieve the dual dividends of narrowing carbon inequality within cities and between cities? Empirical evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 195(C).
    13. Adamolekun, Gbenga & Sakariyahu, Rilwan & Lawal, Rodiat & Ahmed, Ammar, 2023. "Electronic trading and stock market participation in Africa: Does technology induce participation?," Economics Letters, Elsevier, vol. 224(C).
    14. Comlanvi Martin Konou, 2023. "Entrepreneurial Risk and Digital Financial Inclusion: A Cross‐Country Analysis," Economic Papers, The Economic Society of Australia, vol. 42(3), pages 267-281, September.
    15. Mallela, Keerti & Singh, Sunny Kumar & Srivastava, Archana, 2023. "Remittances, financial development, and income inequality: A panel quantile regression approach," International Economics, Elsevier, vol. 175(C), pages 171-186.
    16. Ahmad, Ahmad Hassan & Green, Christopher J. & Jiang, Fei & Murinde, Victor, 2023. "Mobile money, ICT, financial inclusion and growth: How different is Africa?," Economic Modelling, Elsevier, vol. 121(C).

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