Financial Innovation and Industrial Diversification in Macao: The Pandemic's Moderating Role and Managerial Implications

Abstract Macao’s economy encountered challenges during the COVID-19 pandemic, exacerbated by its heavy reliance on the gaming sector. Industrial diversification is critical for sustainable development. The financial industry demonstrated robust vitality, with value-added growth persisting despite the pandemic, supporting efforts to sustain diversification and enhance risk prevention. Financial innovation, including traditional financial innovation and financial technology innovation, is promising. This study employs seven indicators to evaluate financial innovation using principal component analysis and factor analysis, revealing significant improvement in Macao’s financial innovation levels over the pandemic years (2020–2022). It further examines the relationship between financial innovation and industrial diversification, with the pandemic period incorporated as a moderating variable. Findings indicate that financial innovation reduced industrial diversification in non-pandemic years but enhanced diversification during the pandemic, driven by a significant interaction between financial innovation and the pandemic. The study acknowledges limitations and offers policy and managerial recommendations to guide future development. Note: Both Macao and Macau are recognized as valid official names. Because the majority of government documents use Macao, this study uses Macao throughout, except for University of Macau, its address, and specific documents that use Macau. Keywords: financial innovation, fintech, industrial diversification, Macao/Macau economy, COVID-19 impact, principal component analysis, factor analysis, economic policy, financial resilience Subjects: #Finance, #EconomicDevelopment, #RegionalEconomics, #InnovationStudies, #PolicyAnalysis, #StatisticalMethods, #Sustainability, #CrisisManagement Citing This Article APA Style: Lin, J. (2025). Financial innovation and industrial diversification in Macao: The pandemic’s moderating role and managerial implications. Global Empirical Marketing Studies, 1(1), Article e1.2025.08.15. https://doi.org/10.5281/zenodo.16883723 Acknowledgments The author deeply thanks the Global Empirical Marketing Studies (GEMS) editorial team, led by Editor-in-Chief Associate Professor Dr. Chanthika Pornpitakpan, for their rigorous feedback and extensive corrections and improvements to this manuscript.