Exploring the Role of Financial Technology, Financial Systems, and Financial Development in Sustainable Economic Growth: The Mediating Effect of Human Capital in Saudi financial institutions

Abstract

This study examines the direct and indirect effects of financial technology (FinTech), financial information systems (FIS), and financial development (FID) on sustainable economic growth (SEG) in Saudi financial institutions, with human capital (HC) examined as a mediating mechanism. Drawing on Human Capital Theory, Endogenous Growth Theory, and Financial Development and Growth Theory, the study develops a conceptual framework linking technological and financial advancement with workforce capabilities and sustainable economic performance. A quantitative research design was employed using a self-administered questionnaire distributed among finance executives, managers, and employees of financial institutions operating in Riyadh, Saudi Arabia. Of the questionnaires distributed, 346 valid responses were obtained and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) through Smart PLS 4. The findings demonstrate that FinTech, FIS, and FID have significant positive effects on SEG and that all three financial dimensions significantly enhance HC. Furthermore, HC has a significant positive effect on SEG and partially mediates the relationships between FinTech, FIS, FID, and SEG. Among the three predictors, FinTech exhibits the strongest effect on HC, highlighting its importance in developing workforce capabilities within Saudi financial institutions. The findings indicate that technological and financial advancement contributes most effectively to sustainable economic growth when accompanied by investment in human capital. The study provides practical implications for policymakers and financial institution managers seeking to advance digital transformation, financial innovation, workforce development, and sustainable economic growth in Saudi Arabia in alignment with Vision 2030.