Fintech and Financial Inclusion: Evaluating the Effects of Digital Financial Services on Economic Inequality

This study examines the relationship between FinTech-driven digital financial inclusion and income inequality, with particular emphasis on distributional heterogeneity across income groups. While digital finance is often promoted as an inclusive growth mechanism, existing empirical evidence remains inconclusive and largely reliant on average-effect estimation techniques. To address this gap, the study employs a distribution-sensitive econometric framework using quantile regression on cross-country panel data. The findings reveal that digital financial inclusion is associated with a reduction in income inequality primarily at the lower end of the income distribution, where financial constraints are most binding. In contrast, effects at middle and upper income quantiles are weaker, conditional, or statistically insignificant. The results further indicate that FinTech development and institutional quality play important moderating roles in shaping inclusion outcomes. Overall, the study demonstrates that FinTech-driven financial inclusion is not uniformly egalitarian but operates in a heterogeneous and context-dependent manner, underscoring the importance of distributional analysis in evaluating digital finance and inequality dynamics.