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Do Financial Technology Firms Influence Bank Performance?

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  • Dinh Phan
  • Paresh Kumar Narayan
  • Akhis R. Hutabarat

Abstract

In this paper we develop the hypothesis that the growth of financial technology (FinTech) will negatively influence bank performance. We study the Indonesia market, where FinTech growth has been impressive. Using a sample of 41 banks and data on FinTech firms, we show that the growth of FinTech firms negatively influences bank performance. We test our main conclusion through multiple additional and robustness tests, such as the sensitivity to bank characteristics, effects of the global financial crisis, and use of alternative estimators. Our main conclusion that FinTech negatively predicts bank performance holds.

Suggested Citation

  • Dinh Phan & Paresh Kumar Narayan & Akhis R. Hutabarat, 2018. "Do Financial Technology Firms Influence Bank Performance?," Working Papers WP/19/2018, Bank Indonesia.
    • Handle: RePEc:idn:wpaper:wp192018
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