Financial Technology and Financial Inclusion: Evidence from East African Community Member Countries

This study examines the effect of financial technology on financial inclusion in the eight East African Community member countries over 2014–2023, using a balanced panel of 80 country-year observations. Fintech is measured by penetration rate, usage rate and transaction intensity (mobile-money transactions per adult), with GDP per capita, inflation, financial literacy and bank-branch density as controls. Panel unit root and Kao cointegration tests are reported, and random-effects and fixed-effects estimators are compared with the Hausman test (χ²(5) = 4.79, p = 0.441), with two-way fixed effects, first differences and correlated random effects as robustness checks. Penetration rate (β = 4.965, p = 0.002) and transaction intensity (β = 4.552, p = 0.001) have positive significant effects that survive the controls and fixed effects, whereas usage rate has no significant independent effect; GDP per capita is the strongest control. Fintech advances inclusion through breadth of access and economically meaningful transaction use rather than frequency of use: repeated low-value transfers do not connect users to formal savings, credit or insurance. Because the effects reflect long-run co-movement rather than year-to-year changes, they are interpreted as long-run associations. Policy should prioritise affordable access, interoperable payments and bank–fintech partnerships that convert activity into formal participation. JEL classification numbers: G21, G23, O16, O33, O55.