The Effects of Monetary Policy and Financial Technology on Inflation: Evidence From Emerging and Developing Countries

This paper investigates the effects of monetary policy and financial technology on inflation in emerging and developing countries. The study uses panel data of 80 countries over the period, 2000-2021. The Dynamic System General Moments Method is employed in the analysis. The empirical findings indicate that inflation is negatively influenced by monetary policy. Similarly, increased access to financial services through Fintech has a reducing effect on inflation. However, Fintech utilization promotes inflationary pressures in an economy. Additionally, the interaction between monetary policy and access to Fintech services has a positive correlation with price stability whereas the interaction of tight monetary policy and Fintech utilization reduces inflation in emerging and developing countries. The paper contributes to extant literature on the relationship between monetary policy, Fintech and inflation and further adds new contributions on how these two affect the stability of prices of goods and services in the era of technological financial innovations in an economy.