UNRAVELING THE NEXUS OF FINTECH SERVICES AND FINANCIAL INCLUSION: A CASE OF ISLAMIC BANKS IN PAKISTAN
Keywords:
FinTech & Digital Financial Literacy, Financial Inclusion & Trust, Perceived Shariah Compliance, Perceived Regulatory Support & Security, Islamic Banks of PakistanAbstract
This study explores the role of financial technology (FinTech) in advancing financial inclusion within Pakistan’s dual banking system, focusing specifically on Islamic banks. It identifies key factors influencing FinTech adoption, such as trust, service quality, perceived regulatory support, and perceived security, while examining their collective impact on individuals' access to formal financial services. A key contribution is introducing perceived Shariah compliance as a moderator, marking its first empirical use in the Pakistani context.
Additionally, digital financial literacy is incorporated as a mediating variable to understand how knowledge and capability in digital finance influence this relationship. The conceptual model is tested using Partial Least Squares Structural Equation Modeling (PLS-SEM) on data collected from approximately 616 FinTech users across Pakistan through convenience sampling, including participants recruited via social media and Islamic bank customers to ensure diversity and contextual relevance.
The findings reveal that trust, perceived usefulness, perceived security, and regulatory support significantly enhance financial inclusion, with digital financial literacy as a crucial mediator. Importantly, perceived Shariah compliance strengthens these relationships, underscoring its pivotal role in facilitating technology-driven financial inclusion in Islamic banking environments.
This study contributes uniquely to the literature by integrating Islamic finance principles with FinTech adoption and digital literacy, offering practical implications for FinTech providers, Islamic financial institutions, and policymakers aiming to develop Shariah-compliant, inclusive financial ecosystems in emerging markets.
Jel Classification Codes: G21, G23, G24, D14, Z12.
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This work is licensed under a Creative Commons Attribution 4.0 International License.
