Is Schumpeter Right? Fintech and Economic Growth

IMF Working Papers, February 2, 2024

Source details

Objective: Investigate the relationship between fintech and economic growth.
Data and scope:
- Panel of 198 countries over the period 2012–2020.
- Novel dataset with direct measures of fintech.
- Dynamic modelling used to address potential endogeneity.
Author and publication:
- By Serhan Cevik; February 2, 2024.
- IMF Working Papers, Working Paper No. 2024/020, Issue 020, Volume 2024, Pages: 15.
- DOI: https://doi.org/10.5089/9798400266324.001
- Stock No: WPIEA2024020; ISBN: 9798400266324; ISSN: 1018-5941.

Fintech effects vary by instrument type:
- Digital lending has a statistically significant positive effect on real GDP per capita growth.
- Digital capital raising has a large but insignificant effect on real GDP per capita growth.
Aggregate impact:
- The overall impact of fintech (including all instruments) is positive and statistically significant because of the overwhelming share of digital lending in total.
Heterogeneity across country groups:
- The positive relationship between fintech and growth is stronger in magnitude in advanced economies.
- The statistical significance of the fintech–growth effect is higher in developing countries.
Interpretation:
- Results are consistent with Schumpeter’s prediction that financial innovation can promote growth, but not every type of fintech acts as an accelerator.

Subject areas: Digital financial services, Financial markets, Financial sector development, Fintech, Gross fixed investment, National accounts, Technology.
Keywords: capital raising, Digital financial services, Financial sector development, Fintech, fixed capital capital formation, Global, Gross fixed investment, impact magnitude, novel dataset, statistical significance.

Content based on "Is Schumpeter Right? Fintech and Economic Growth", Serhan Cevik, IMF Working Papers 2024/020 (February 2, 2024).