Financial inclusion is strikingly low in emerging economies. In only a few years, financial technologies (fintech) have led to a dramatic expansion in the number of non- traditional  credit  intermediaries,  but  the  macroeconomic  and  credit- market implications of this rapid growth of fintech are not known. We build a model with a   traditional banking system and endogenous fintech intermediary creation and find that greater  fintech  entry  delivers  positive  long -term  effects  on  aggregate  o utput and   consumption. However,   greater   entry   bolsters   aggregate   firm   financial inclusion only if it stems from lower barriers to accessing fintech credit by smaller, unbanked  firms. Decreasing entry costs for fintech intermediaries alone has only marginal effects  in  the aggregate.  While  firms  that  adopt  fintech  credit  are  less sensitive  to  domestic  financial shocks  and  contribute  to  a  reduction  in  output volatility, greater fintech entry also leads to greater volatility in bank credit, thereby introducing a tradeoff between output volatility and credit -market volatility. 

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