Is Fintech Lending and Financial Inclusion Able to Accelerate Indonesia’s Economic Growth?

Abstract

This research investigates the relationship between fintech lending, financial inclusion, environmental quality, and economic growth in 34 Indonesian provinces from 2019 to 2024. It contributes to the literature by integrating these three dimensions within an analytical framework to assess regional economic growth in Indonesia. Based on provincial panel data, the study applies a Fixed Effects Model (FEM). The results indicate that fintech lending and ATM card ownership are positively and significantly associated with economic growth. In contrast, electronic money, third-party funds, and the Human Development Index (HDI) exhibit no statistically significant relationships with economic growth. The Environmental Quality Index has a positive but statistically insignificant coefficient, whereas population size is negatively and significantly associated with economic growth. These findings suggest that the relationships between digital financial development, financial inclusion, environmental quality, and economic growth vary across the indicators examined. From a policy perspective, the findings highlight the importance of strengthening fintech lending governance, expanding access to financial services and financial literacy, and formalizing development policies that consider demographic dynamics and environmental quality.