FinTech actually increases household income inequality in the short term before eventually reducing it.
April 1, 2026
Original Paper
How Does FinTech Affect Household Income Inequality? Evidence from China
SSRN · 6505590
The Takeaway
While often promoted as a tool for financial inclusion, FinTech initially gives high-income households a 'return advantage' because they have the tools to use it better. It only alleviates inequality in the long run once it reaches enough scale to boost employment in small businesses.
From the abstract
This paper investigates the impact of FinTech development on income inequality inigital Inclusive Finance Index from 2013 to 2019. The results show that FinTech significantly widens income inequality in the short run by strengthening high-income households’ financial participation and return advantages, but alleviates inequality in the long run through expanding employment opportunities in small and medium-sized enterprises. Furthermore, the institutional environment plays a key moderating role: