The role of Financial Technology on Financial Inclusion and Profitability: The Case of Selected Commercial Banks in Ethiopia
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Date
2025-09
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Addis Ababa University
Abstract
This study focuses on analyzing the role of financial technology (FinTech) in enhancing financial inclusion and profitability, with a specific emphasis on selected Ethiopian
commercial banks. The study also utilized financial data from 2010 to 2023 and adopted an explanatory research design. Primary data were collected from 210 high-level
managers across 12 purposively selected banks, supplemented by financial statements (2010–2023). A structured questionnaire was used as the primary research instrument,
focusing on three main FinTech dimensions: alternative payment methods (APMs) and automation (Auto) as independent variables, and financial inclusion (FI) as a mediating
variable. A total of 210 questionnaires were distributed to the selected banks. To evaluate the relationship between FinTech and profitability (measured by net profit margin), the
study employed multivariate regression analysis. Given the quantitative nature of the research, explanatory statistical techniques were applied using SPSS software for data
analysis and presentation. The findings indicate that FinTech dimensions—specifically APMs and automation—positively influence financial inclusion. Results revealed that
APMs significantly improved Financial inclusion (β = 0.648, p = 0.006), while automation had a moderate effect (β = 0.401, p = 0.05). Financial inclusion mediated
34.5% of profitability variance (R² = 0.345), underscoring FinTech’s role in operational efficiency and inclusive growth. The findings advocate for strategic investments in APMs
and automation to bolster bank performance in emerging markets
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Keywords
FinTech, Alternative payment methods, Automation, Financial inclusion, profitability, commercial banks