The Impact of Fintech on Financial Inclusion in India: An Empirical Analysis of Digital Payment Adoption and Banking Access

Abstract

This study examines the impact of financial technology (fintech) on financial inclusion in India using panel data from 28 states over the period 2015-2023. Employing a fixed-effects regression model and instrumental variable approach, we analyze how digital payment adoption, mobile banking penetration, and fintech infrastructure affect various dimensions of financial inclusion. Our findings reveal that a 10% increase in digital payment adoption leads to a 7.2% improvement in the financial inclusion index, with particularly strong effects in rural and economically disadvantaged regions. The study also demonstrates that fintech adoption reduces the gender gap in financial access by 23% and increases formal credit access by 31% among previously unbanked populations. These results provide crucial insights for policymakers and financial institutions seeking to leverage technology for inclusive growth.