Assessing the impact of fintech development on financial inclusion in the MENA region: evidence from panel data models

This study investigated the transitional impact of bank-led FinTech adoption on financial inclusion using a panel of 253 commercial banks across the MENA region from 2008 to 2022. Employing both static models and a System GMM estimator, the findings revealed that, in the short to medium term, digital transaction expansion significantly enhanced the density of physical banking infrastructure, supporting the omnichannel complementarity perspective. Increased digital payment activity promoted credit penetration by reducing information asymmetries between banks and borrowers. Although static estimations suggested a positive relationship between FinTech and account ownership, dynamic estimations indicated a negative long-run elasticity. This contrasting result highlighted a structural substitution effect, whereby advanced FinTech ecosystems increasingly shifted financial activity away from traditional bank accounts toward mobile-first and decentralized payment platforms. The results demonstrated that FinTech affected financial inclusion unevenly across its dimensions and underscored the need for transaction-oriented regulatory frameworks and hybrid banking strategies to foster sustainable financial inclusion in the MENA region.