Article

Spatial Econometric Modelling of FinTech Firm Clusters and the Digital Economy Spillover in Urban vs. Rural Regions

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Abstract

The rapid expansion of Financial Technology (FinTech) has accelerated digital economic transformation, yet its spatial impacts remain unevenly distributed across regions. This study investigates how FinTech firm clustering influences digital economy performance through spatial spillover mechanisms, with explicit comparison between urban and rural regions. Using subnational panel data and spatial econometric techniques, the analysis first identifies significant positive spatial autocorrelation in digital economy outcomes, confirming that regional digital performance is spatially clustered rather than randomly distributed. Estimation results from a Spatial Durbin Model demonstrate that FinTech clustering exerts a strong and statistically significant positive effect on regional digital economy indicators, even after controlling for income levels, connectivity, and human capital. The findings reveal pronounced urban–rural heterogeneity. Urban regions exhibit higher FinTech cluster intensity, stronger direct effects, and substantially larger indirect spillovers to neighboring regions, indicating robust diffusion through dense infrastructure, platform interoperability, and labor mobility. Impact decomposition shows that indirect effects account for nearly forty percent of the total FinTech impact in urban areas, compared to approximately one quarter in rural regions. In rural contexts, digital connectivity emerges as a binding constraint that conditions the magnitude of spillover absorption, limiting the extent to which proximity to FinTech hubs translates into digital gains. Overall, the results demonstrate that FinTech-driven digital development is spatially contingent and mediated by regional absorptive capacity. The study contributes to the FinTech and digital economy literature by integrating firm-level clustering with spatial econometric modelling and by providing novel evidence on urban–rural disparities in spillover dynamics. From a policy perspective, the findings underscore the importance of place-based digital strategies that combine FinTech ecosystem development with targeted investments in infrastructure and institutional readiness to reduce regional digital inequality.

Keywords: Financial Technology, Digital Economy, Spatial Econometrics, FinTech Clusters, Spatial Spillovers

How to Cite:

Abikhair, A. & Guanghui, H., (2025) “Spatial Econometric Modelling of FinTech Firm Clusters and the Digital Economy Spillover in Urban vs. Rural Regions”, FinTech Innovation Journal 1(3), 221-240. doi: https://doi.org/10.63913/ftij.v1i3.96