Exploring Potential Nonlinear Links Between Fintech and Inclusive Development in Africa

Solomon Oluwaseun Okunade
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Solomon Oluwaseun Okunade: Department of Economics, Chrisland University, Abeokuta, Nigeria Centre for Research and Statistics, Chrisland University, Abeokuta, Nigeria

Ilorin Journal of Economic Policy, 2025, vol. 12, issue 2, 21-39

Abstract: Despite the growing literature on financial technology (FinTech) and its transformative potential for inclusive development, limited attention has been given to its nonlinear impacts. This study examines the threshold and nonlinear effects of FinTech on economic growth, poverty, and income inequality in Africa. Using dynamic panel threshold regression techniques, we analyse data from 16 leading African FinTech economies spanning 2000–2023. The findings reveal that the relationships between FinTech and poverty/inequality and growth are nonlinear and contingent on specific threshold levels. Precisely, FinTech exhibits an inverted U-shaped relationship with both poverty and inequality, as well as a U-shaped relationship with economic growth. The threshold levels of FinTech mark critical tipping points beyond which FinTech begins to stimulate growth and reduce poverty and inequality in Africa significantly. These results underscore the importance of expanding FinTech ecosystems in Africa beyond critical thresholds to realise sustainable and inclusive economic outcomes. Policy implications include the need for targeted investments, regulatory support, and digital infrastructure to ensure that FinTech reaches its developmental potential across the continent.

Keywords: FinTech; Inclusive Development; Economic Growth; Poverty; Inequality; Africa. (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ilojep:022116

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