FinTech and financial sustainability: A mediating role of financial inclusion

Technological advancements and shifts in the financial landscape have made it imperative to delve into the nexus between FinTech, financial inclusion, and financial sustainability. Surprisingly, contemporary research has largely overlooked this crucial area of investigation. The current study examines the impact of changes primarily driven by FinTech and how they mediated financial inclusion to foster financial sustainability. For this purpose, the study encompassed a dataset of 141 countries from 2011 to 2021 and employed Structural Equation Modeling (SEM). In addition, the Sobel-Goodman test was employed to provide a comprehensive and robust understanding of the nexus. Our results across all specifications demonstrate that financial inclusion mediates the nexus between FinTech and financial sustainability. Furthermore, in some specifications, FinTech adversely affects financial sustainability by posing risk and regulatory challenges. Moreover, these findings remain robust in the whole sample and subsamples of developed and developing countries. These outcomes hold significant implications, as they underscore how FinTech enhances access to financial services, reshapes the financial landscape, and indirectly contributes substantially to financial sustainability.