Financial technology as a tool to enhance financial consumer protection and reduce defaults on personal loans: to achieve financial inclusion and sustainable development in Jordan

Financial technology (FT) has been credited for supporting sustainable development and financial inclusion. However, issues such as balancing innovation with consumer protection and the challenges of loan default have emerged as significant concerns in this context. The study aimed to test the impact of FT on financial inclusion and sustainable development in Jordan, mediated by financial consumer protection and reduced loan default. The quantitative research design was adopted, with structured questionnaires to collect data from 457 Jordanian adults. The data analysis used Partial Least Squares Structural Equation Modeling (PLS-SEM). As anticipated, the results confirmed that FT positively impacted financial inclusion and sustainable development, with financial consumer protection playing a strong mediating role. However, FinTech did not reduce loan defaults, contrary to expectations, and underscored the potential regulatory gap in the digital lending market in Jordan. The study empirically validated the need for consumer protection measures in the widespread adoption of FinTech. At the same time, it provided evidence of a unique market environment where digital transformation does not necessarily mitigate credit risk as expected. The findings give policymakers in the financial market the grounds to make the regulatory environment more resilient to volatility in the context of FinTech. The study’s originality is provided using Protection Motivation Theory and Diffusion of Innovation Theory to explain FT’s double impact on financial inclusion and sustainable development in emerging markets.