Integrating financial literacy, regulatory technology, and decentralized finance: A new paradigm in Fintech evolution

  • Received February 1, 2024;
    Accepted April 22, 2024;
    Published May 10, 2024
  • Author(s)
  • DOI
  • Article Info
    Volume 21 2024, Issue #2, pp. 213-226
  • Cited by
    1 articles

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This work is licensed under a Creative Commons Attribution 4.0 International License

This study investigates the implications of the interaction of financial literacy, regulatory technology, and decentralized finance applications for financial sector development. A two-step analytical regression approach on EViews 10 was used, which performs a one-factor analysis for each variable to identify the individual impact of each factor. A linear FMOLS approach was used to evaluate the cooperative effect of integration. The methodology was implemented on a dataset comprising 2,880 observations from 23 financial institutions in Jordan.
The findings support the hypothesized dynamic interrelations between the essential Fintech factors relevant to the sustainable development of the financial sector, including significant and insignificant factors with the impact of inflation, which provides an adequate understanding of Fintech’s evolution. Additionally, the outcomes consider post-2017 regulatory changes that reflect the role of supervision and regulation for the financial sector’s flexibility and efficiency. Therefore, the results reveal the essential contribution of integrating decentralized finance applications, financial literacy, and regulatory technology to the development of Jordan’s financial sector. Financial literacy serves as a facilitator, regulatory technology is a compliance enabler, and decentralized finance applications are driving forces of innovation and financial inclusion, ensuring a robust and sustainable financial ecosystem. It is shown that the interaction of factors forces the sector’s development, reflecting the world’s trend in digital inclusion and viable financial development.

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    • Figure 1. Visual representation of study hypotheses
    • Figure 2. Financial sector composition in Jordan (2022)
    • Figure 3. Research variables trend
    • Table 1. Research metrics
    • Table 2. Financial development measures
    • Table 3. Summary statistics
    • Table 4. CBJ regulatory instructions (2011–2022)
    • Table 5. One-factor regression analysis results
    • Table 6. FMOLS cointegration regression analysis
    • Conceptualization
      Jamileh Ali Mustafa
    • Data curation
      Jamileh Ali Mustafa
    • Formal Analysis
      Jamileh Ali Mustafa
    • Funding acquisition
      Jamileh Ali Mustafa
    • Investigation
      Jamileh Ali Mustafa
    • Methodology
      Jamileh Ali Mustafa
    • Project administration
      Jamileh Ali Mustafa
    • Resources
      Jamileh Ali Mustafa
    • Software
      Jamileh Ali Mustafa
    • Supervision
      Jamileh Ali Mustafa
    • Validation
      Jamileh Ali Mustafa
    • Visualization
      Jamileh Ali Mustafa
    • Writing – original draft
      Jamileh Ali Mustafa
    • Writing – review & editing
      Jamileh Ali Mustafa