The Role of FinTech Innovation in Driving Financial Inclusion and SME Growth: Evidence from Emerging Economies

Abstract

This study examines the impact of FinTech innovation on financial inclusion and small business growth within emerging economies. We employed a quantitative cross-sectional design across five emerging economies, analyzing data from 984 small and medium-sized enterprises (SMEs) through stratified random sampling. Primary data were collected via structured questionnaires and interviews, while secondary data came from central bank reports and industry databases. Statistical methods included multiple linear regression, Structural Equation Modeling (SEM), and Confirmatory Factor Analysis. Our results reveal widespread FinTech adoption: 84.9% of businesses used digital payments, 76.3% adopted mobile banking, and 61.8% accessed digital lending. FinTech adoption significantly predicted business growth (, ), with the regression model explaining 75.2% of variance (). Strong positive correlations emerged between FinTech adoption and financial inclusion (, ), business profitability (, ), and enterprise sustainability (, ). Furthermore, SEM analysis indicated good model fit (CFI = 0.97, RMSEA = 0.043). Comparatively, businesses with high FinTech adoption exhibited 30.4% higher financial inclusion, 24.6% greater revenue, and 18.9% higher employment generation than those with low adoption. The novelty of this research lies in its integrated analysis of FinTech adoption, financial literacy, and SME performance within a unified SEM framework across multiple emerging economies. These findings contribute empirical evidence that FinTech innovation serves as a critical driver of inclusive economic development. We therefore recommend supportive regulatory frameworks, digital infrastructure investments, and financial education programs to maximize the economic benefits of FinTech-enabled financial ecosystems