Does financial technology promote financial inclusion and entrepreneurial financing? Empirical evidence from Somalia’s integrated Household Budget Survey

Access to finance is essential for personal and business development, yet in credit-constrained environments in developing countries, households and enterprises face significant barriers. Existing literature acknowledges FinTech as a pivotal driver of financial access but often treats personal and business financial inclusion in a dichotomous manner. To address this gap, this study adopts a more comprehensive approach by integrating financial intermediation, financial inclusion, diffusion, and endogenous growth theories to explore the impact of FinTech on both personal financial inclusion and business entrepreneurial financing. Using the Somalia Integrated Household Budget Survey dataset, the study employs non-linear logit and probit models to empirically assess the likelihood that FinTech contributes to financial inclusion and entrepreneurial development. The findings reveal that while FinTech significantly promotes personal financial inclusion, its impact on entrepreneurial financial inclusion is limited. However, when examining personal financial inclusion, the results demonstrate that FinTech has a significant impact on entrepreneurial financial inclusion. These findings suggest that a narrowly defined, individual-based approach to financial inclusion is insufficient for fostering comprehensive and sustainable financial inclusion. The results, having withstood rigorous empirical robustness checks, carry significant policy implications for the effective implementation of the development plans outlined in the recently crafted Somali National Transformation Plan.