Financial exclusion has been a serious threat to economic prosperity in Pakistan. Socio-economic blockades hinder the access of economic agents to formal finance. The literature shows two problems that are still unaddressed: a limited number of studies provide empirical evidence on how regulatory sandboxes influence digital asset adoption and limited consideration has been drawn to how socio-economic inconsistencies condition the effectiveness of FinTech solutions. Hence, this study examines how digital assets, enabling technologies, regulatory approaches around the globe and socio-economic factors influence financial inclusion in Pakistan, focusing on how regulatory sandboxes can enhance it.
The study utilizes the data collected from an online survey of 600 individual professional from digital finance, regulations and technology adoption. We employed structural equation modeling to test hypothesized relationships and moderation effects.
Results indicate that socio-economic factors (β = 0.35, p < 0.001), technology (β = 0.32, p < 0.001) and digital asset types (β = 0.28, p < 0.001) significantly enhance financial inclusion, while global policies exert a smaller but positive influence (β = 0.22, p < 0.01). The regulatory sandbox plays a moderating role, strengthening the impact of technology (β = 0.13, p < 0.01) and digital assets (β = 0.11, p < 0.05) on financial inclusion.
The findings highlight that flexible regulation encourages innovation and risk management, making socio-economic development, technology adoption and asset diversity more effective in advancing inclusion.
The empirical results of this study extend the literature on how regulatory sandboxes function as institutional mechanisms that translate digital innovation into inclusive financial outcomes, particularly in emerging economies, i.e. Pakistan, and these findings offer practical insights for policymakers, regulators and managers on designing adaptive regulatory frameworks that balance innovation with consumer protection while supporting inclusive growth.
