The Impact of Financial Technology (Fin Tech) on Economic Growth: Evidence from Tanzania

Abstract

This research is driven by the rapid spread of fintech, and its contributions to Tanzania’s economic growth. This study uses quantitative quarterly time series data from Tanzania from 2008 to 2022. The Augmented Dicky Fuler (ADF) is used for the stationarity test, Johansen Cointegrations for the hypothesis and Cointegrations test, VAR and VECM for testing both short-run and long-run causality relationships, and Granger Causality for testing variable causality. The Ordinary Least Squares (OLS) regression model is used for parameter estimation, modelling and significance testing. The results show that the model is statistically significant and the independent variables in the regression accounted for around 89% of the overall variation in GDP. Fintech variable subscriptions have a positive impact on Tanzania’s economic growth. Thus, unemployment in Tanzania may be alleviated by the growing sector of financial technology. Fintech has involved many people from all over the world, including Tanzania, and has had a positive impact on both the national economy and per capita growth. Since TTCL and ZANTEL have witnessed a sharp decline in subscriptions, the government, as a fixed-wired broadband service provider, must take the necessary steps to increase the subscriptions.

Key Words: Fintech. Economic Growth. M-Pesa. Tanzania