Empirical Insights into Financial Integration: Fintech Credit and Regulatory Dynamics

Abstract

Financial integration is essential because it has the potential to enhance economic growth and stability by facilitating cross-border capital flows and reducing financial market fragmentation. This study investigates the influence of fintech credit and banking regulations on financial integration in developed and developing countries, spanning 2013 to 2019. We consider financial integration the dependent variable and select fintech credit, banking regulations, bank concentration, remittance volumes, state-owned enterprises, and financial development as explanatory variables. The study employs the Generalized Method of Moments (GMM) to estimate the coefficients. The findings indicate that fintech credit, remittance volumes, and financial development contribute positively to financial integration. In contrast, banking regulations exhibit an insignificant relationship with financial integration. Moreover, the results indicate that bank concentration andstate-owned enterprises deter financial integration among nations. The implications of the results suggest that to enhance financial integration, global economies should promotefintech credit, increase remittance volumes, and foster financial developmentwhile concurrently discouraging bank concentration and state-owned enterprises.