Financial systems and poverty dynamics: a literature review on the role of institutions and fintech in economic growth

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ABSTRACT This paper provides a comparative, region-specific review of financial development’s impacts on economic growth and poverty alleviation, highlighting the dual influence of institutional quality and financial technology across diverse economic contexts. Drawing upon key theoretical frameworks, including the Financial Intermediation Theory and the Financial Kuznets Curve, the study examines how financial development functions as a catalyst for economic growth by facilitating capital access, encouraging investment, and supporting entrepreneurship. Findings indicate that financial development significantly enhances economic growth and reduces poverty; however, these relationships are moderated by factors such as institutional quality, governance structures, and financial literacy levels. This paper further explores the evolving role of financial technology (fintech) in improving financial inclusion, while addressing associated challenges like digital over-indebtedness. Policy recommendations emphasize the need for robust regulatory frameworks that ensure equitable access to financial services and enhance institutional support. Additionally, the study underscores the importance of aligning financial development with sustainable practices to address pressing socio-economic challenges. Concluding with an invitation for future research, the paper identifies areas such as the longitudinal impacts of financial interventions in low-income regions, the role of fintech in advancing financial inclusion, and the interactions between financial development and broader socio-economic factors.