Fintech, technological innovation and regional economic growth: Theoretical modeling and empirical evidence

Xirong Huang, Jichang Dong and Xiuting Li

China Economic Review, 2025, vol. 91, issue C

Abstract: This study aims to investigate the role of fintech in stimulating innovation and promoting regional economic growth. A Multi-Sector Endogenous Growth Model (MEGM) is constructed by incorporating fintech while internalizing technological progress and human capital accumulation within the framework of creative destruction. Based on this model, we theoretically analyze how fintech influences innovation and regional economic growth, followed by empirical testing using panel data from 246 prefecture-level cities in China during the period from 2012 to 2020. Furthermore, we contextualize these findings within China's fintech development landscape, trends in technological innovation, and patterns of regional economic growth. The results demonstrate that fintech exerts a significant incentive effect on regional innovation and effectively promotes economic growth. Heterogeneity analysis based on cities' endowments reveals that the impact of fintech is more pronounced in financially developed cities, those with high digital endowments, as well as in first- and second-tier cities. The analyses presented herein elucidate how fintech facilitates technology-driven regional economic growth in China, providing valuable insights for fostering innovation-driven development through fintech.

Keywords: Fintech; Technological innovation; Economic growth; Endogenous growth model; Panel data analysis (search for similar items in EconPapers)
JEL-codes: G20 O16 O31 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:91:y:2025:i:c:s1043951x25000550

DOI: 10.1016/j.chieco.2025.102397

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