Fintech's impact on financial inclusion in South Asian countries (SAARC): a cross-country analysis

This study examines the impact of fintech adoption on financial inclusion through digital financial services (DFS) in South Asian countries (SAARC). It assesses how fintech innovations contribute to financial accessibility using cross-country panel data from 2004 to 2023. A multidimensional Financial Inclusion Index (FII) is constructed based on Sarma's (2012) methodology, evaluating penetration, availability and usage of financial services. The study employs a Random Effects Model (REM) to capture country-specific variations, with data sourced from the IMF, World Bank and SAARC central banks. Fintech innovations—such as mobile banking, digital wallets and internet-based transactions—positively impact financial inclusion. Key drivers include ATMs, debit cards and mobile/internet banking transactions, while mobile money transaction values show a negative effect, suggesting market saturation. Literacy rates significantly moderate these relationships. Nepal and Maldives have improved due to digital initiatives, while Sri Lanka lags due to economic challenges. Secondary data may not capture informal transactions. Regulatory differences pose challenges, requiring future research with primary data. Strengthening digital infrastructure, promoting financial literacy and fostering regional fintech collaboration can enhance financial inclusion, empowering underserved populations and fostering economic resilience. This research constructs a multidimensional FII tailored to SAARC economies, offering insights for policymakers and stakeholders.