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© 2025 International Monetary Fund
WP/25/44
IMF Working Paper
European Department
Prometheus Unbound: What Makes Fintech Grow?
Prepared by Serhan Cevik1
Authorized for distribution by Jan Kees Martijn
February 2025
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Abstract
The rise of financial technologies—fintech—could have transformative effects on the financial landscape, expanding the reach of services beyond the confines of geography and creating new competitive sources of finance for households and firms. But what makes fintech grow? Why do some countries have more financial innovation than others? In this paper, I use a comprehensive dataset to investigate the emergence and spread of fintech in a diverse panel of 98 countries over the period 2012–2020. This empirical analysis helps ascertain economic, demographic, technological and institutional factors that enable the development of fintech. The magnitude and statistical significance of these factors vary according to the type of fintech instrument and the level of economic development (advanced economies vs. developing countries). Finally, these findings reveal that policies and structural reforms can help promote financial innovation and cultivate fintech ventures—particularly by strengthening technological and institutional infrastructures and reducing cybersecurity threats.
| JEL Classification Numbers: | G21; G23; G28; L26; O30; O33 |
| Keywords: | Fintech; financial innovation; technological change |
| Author’s E-Mail Address: | scevik@imf.org |
| JEL Classification Numbers: | G21; G23; G28; L26; O30; O33 |
| Keywords: | Fintech; financial innovation; technological change |
| Author’s E-Mail Address: | scevik@imf.org |
The author would like to thank Parma Bains, Marcello Miccoli, Sidra Rehman, Marco Reuter, Kazuko Shirono and the Bank of Lithuania for helpful comments and suggestions, and Can Ugur for excellent research assistance.