Financial Sustainability in Emerging Markets: The Role of Fintech, Risk Management, and Operational Efficiency

Abstract

The rapid evolution of financial technology (fintech) has redefined the global financial landscape, playing a key role in promoting financial inclusion and sustainability, particularly in emerging markets. This study explores the impact of fintech innovations on financial sustainability by focusing on four key factors: financial inclusion, operational efficiency, risk management, and responsible financial behavior. Additionally, the study examines the challenges that impede fintech adoption, such as regulatory barriers, cybersecurity risks, and gaps in financial literacy. Using Partial Least Squares Structural Equation Modeling (PLS-SEM), the research analyzes data collected from 233 fintech users, financial professionals, and regulators in Malaysia, a country experiencing fast-paced fintech adoption. The findings reveal a significant positive relationship between fintech-driven financial inclusion, operational efficiency, risk management, and financial sustainability, while challenges were found to negatively influence financial outcomes. This research provides insights for policymakers and financial institutions aiming to leverage fintech for sustainable economic growth, highlighting its potential to enhance financial resilience and inclusion in underserved populations. The study's comprehensive model offers a holistic understanding of fintech's role in advancing financial sustainability, addressing current gaps in the literature and presenting implications for long-term economic development in emerging markets.