The Impact of Financial Technological Advancement (FinTech) on the Economic Growth: Evidence from Palestine

Abstract

This study examined the impact of financial technology FinTech on economic growth in Palestine, moreover, the study used annual time series data from the Palestinian Ministry of National Economy (MoNE), the Palestinian Ministry of Finance and Planning (MoFP), as well as the Palestinian Central Bureau of Statistics (PCBS) and the Palestinian Monetary Authority (PMA), in addition to investigating the current study of the impact of FinTech on Palestinian economic development for the period (2008 to 2021). In addition, the co-integration was evaluated using a distributed autoregressive approach, and a vector error correction model was used to consider long- and short-term causation. However, the data shows that FinTech products (number of people using the Internet, number of broadband subscriptions, number of mobile cellular subscriptions, number of automated transfer machines, number of branches) contribute to the growth in financial inclusion, which in turn fuels the growth economy in Palestine. Moreover, these results indicate that the (PMA) in Palestine is focusing more on expanding access to financial services. Moreover, this study aims to explore opinions and attitudes regarding the emergence of financial technology in Palestine's future financial services industry. The study’s objectives were also achieved by speaking to a group of managers in the banking and financial services industries, who were administrative employees from departments with technical, software and information technology departments, in addition to departments specialized in technological fields electronic payment services. The study analysis was performed based on the objectivity of the data collected. The approach used in this study was used to produce and rank data-related results for these traits and patterns. According to the findings of the study, it is critical that existing banking and financial institutions, academic institutions, technology companies and business incubators work together to build a supportive environment for the Fintech system in Palestine. According to the ADFGLS co-integration test results, all variables are stable at the initial difference. The results of the ARDL technique show that the co-integration of the variables occurs and that the null hypothesis is rejected. The VECM results show that fintech products have a long-term and short-term causal relationship with both economic growth and financial development. Thus, the results indicate that financial technology in Palestine has many obstacles: rules and regulations, cybersecurity, customer distrust of digital services, etc. All of this is believed to have a direct and beneficial impact on the Palestinian economy.