Abstract
This study quantifies the influence of FinTech, particularly Neo-banking, on inclusive finance, with a focus on how Neobanking as FinTech innovation bridges the financial exclusion gap. We employ Pooled Ordinary Least Squares (OLS) and Quantile Regressions using data across 72 countries from 2017 to 2022. This study also extends empirical experiments to time-fixed effects and Three-Stage Least Squares (3SLS) regressions to address endogeneity and show the robustness of the experiment. We find that Neo-banking has a significantly positive impact on inclusive finance, particularly in encouraging traditional access to finance adoption and inspiring borrowing from traditional banking. Besides, the institutional quality is also significantly fostering inclusive finance. Overall, the output indicates that Neobanking has the ability to reduce the financial exclusion gap by reaching underprivileged communities in isolated or rural locations where there might not be many conventional physical bank branches.