An Empirical Study on the Role of Fintech in Promoting Financial Inclusion and Regional Economic Prosperity

Abstract

This study investigates the impact of financial technology (fintech) on financial inclusion and regional economic growth in Indonesia from 2018 to 2025. Utilizing a mixed-methods approach, the research integrates quantitative analysis of provincial-level data with qualitative insights from interviews with fintech stakeholders, government officials, users, and regional experts. Findings reveal substantial growth in fintech penetration across Indonesia, driven in part by the COVID-19 pandemic, with marked regional disparities linked to differences in digital infrastructure and socio-economic conditions. Fintech significantly enhances financial inclusion by reducing transaction costs, expanding credit access, formalizing informal economies, and accelerating entrepreneurship. These effects translate into positive regional economic outcomes, including increased Gross Regional Domestic Product (GRDP) per capita and poverty reduction, although the influence on income inequality remains limited. Critical moderating factors such as internet infrastructure, digital literacy, and supportive regulation amplify fintech’s benefits. The study highlights the importance of targeted policy interventions to bridge digital divides and foster inclusive fintech ecosystems. These findings provide empirical evidence to guide policymakers and industry stakeholders in leveraging fintech for sustainable and equitable regional development in Indonesia.