Abstract
Modern financial technologies (FinTech) have radically altered how money is stored, saved, borrowed, transferred, and invested, serving as a critical enabler in eliminating financial exclusion and inequality. Using Global Findex waves of survey data from 2011, 2014, 2017, and 2021, this study investigates the relationship between FinTech, financial inclusion, and different dimensions of inequality, including gender, income, and carbon, for a panel of 113 nations. The study used structural equation modelling to simulate both the direct and indirect effects of FinTech, financial inclusion, and inequality. The key findings include (i) FinTech significantly increases income inequality and reduces gender inequality (through financial inclusion). (ii) FinTech promotes financial inclusion. (iii) Financial inclusion reduces all dimensions of inequality. Interestingly, some degree of income and gender inequality incentivises financial inclusion and provides impetus to create inclusive financial policies. (iv) The role of regulatory quality, education, and credit is critical in underpinning the FinTech-financial inclusion-inequality nexus. These key enablers reduce different dimensions of inequality through financial inclusion. These results add to a modest but growing body of work on the role of FinTech and financial inclusion in fostering better resource distribution and inclusive development across countries. Moreover, this is the first study to investigate different dimensions of inequality and model inter-relationships. The study provides preliminary evidence of the varying distributional effects of FinTech and financial inclusion on different dimensions of inequality.