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Schumpeter's Hypothesis Reinvented: Fintech's Impact on Global Economic Growth

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Is Schumpeter Right?: The Impact of FinTech on Economic Growth

By

Serhan Cevik

Date: February 2, 2024

Abstract:

The emergence and growth of fintech have fundamentally reshaped the financial landscape by introducing innovative technologies that enhance and automate various financial services. In this research paper, we utilize a unique dataset to conduct a comprehensive analysis examining the relationship between fintech development and economic growth across 198 countries from 2012 to 2020 using dynamic modeling techniques. This cross-country study addresses potential ogeneity issues by incorporating direct measures of fintech activities into our econometric framework.

Key findings include:

i The impact of fintech on real GDP per capita growth varies deping on the type of financial innovation considered: digital ling services show a statistically significant positive association with economic growth, whereas digital capital rsing platforms exhibit a large but insignificant effect.

ii When considering all types of fintech activities together, the overall influence is positive and statistically significant due to digital ling's predominant role within the total fintech landscape.

iii The magnitude of the relationship between fintech and growth ts to be stronger in advanced economies; however, its statistical significance is notably higher in developing countries.

These empirical results substantiate Schumpeter's hypothesis that financial innovations can foster economic growth, but not all forms of FinTech have the potential to act as accelerators.

Subject Keywords:

Digital Financial Services

Financial Markets

Financial Sector Development

Fintech

Gross Fixed Investment

National Accounts

Technology

For further inquiries or collaboration on this research topic, please contact Serhan Cevik directly at [email protected]. We welcome discussions on potential extensions of the study to include more recent data and explore additional variables that could influence fintech's role in economic growth.


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This article is reproduced from: https://www.imf.org/en/Publications/WP/Issues/2024/02/02/Is-Schumpeter-Right-Fintech-and-Economic-Growth-544390

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