PROMOTING FINANCIAL INCLUSION THROUGH SUSTAINABLE FINTECH AND EFFECTIVE GOVERNANCE: A PANEL DATA ANALYSIS

Abstract

This study examines the role of sustainable FinTech and governance in advancing financial inclusion across emerging economies using advanced dynamic panel data econometric techniques. Utilizing data from authoritative sources such as the World Development Indicators (WDI), World Governance Indicators (WGI), and the IMF Financial Access Survey (FAS), the analysis spans a panel of countries over a 20–25 year period. Key variables include a Financial Inclusion Index—constructed via Principal Component Analysis of bank branches per capita, ATM density, and account usage—a Governance Index based on control of corruption, rule of law, and regulatory quality, financial development measured as domestic credit to the private sector (% of GDP), and GDP per capita as a control variable. The methodology encompasses descriptive statistics, stationarity tests, panel cointegration analysis, and error correction models. Dynamic panel estimation techniques, including Mean Group (MG), Pooled Mean Group (PMG), and Dynamic Fixed Effects (DFE), were employed to capture both short-run and long-run relationships. Results demonstrate significant long-run linkages between governance, financial development, and financial inclusion, underscoring the critical role of institutional quality and financial infrastructure in expanding access to financial services. The study offers actionable insights for policymakers aiming to enhance inclusive financial systems through sustainable FinTech initiatives and governance reforms.