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The Impact of Economic Policy Uncertainty on Systemic Risk in the Fintech Industry: Evidence from Crisis Events and the COVID-19 Pandemic

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  • Aktham Maghyereh

    (Department of Economics and Finance, United Arab Emirates University, United Arab Emirates)

  • Jinxin Cui

    (School of Statistics and Mathematics, Zhejiang Gongshang University, Hangzhou, China)

Abstract

This paper investigates the effect of economic policy uncertainty (EPU) on the systemic risk of the fintech industry. To achieve this goal, we first estimate the evolution of system-wide systemic risk using the CatFin method. We further examine whether EPU significantly affects systemic risk. Our findings demonstrate that the systemic risk of the fintech industry is time-variant and sensitive to major crisis events. Systemic risk tends to increase after major crises, especially the outbreak of the COVID-19 pandemic. EPU has a considerable impact on systemic risk, notably during periods of turmoil.

Suggested Citation

  • Aktham Maghyereh & Jinxin Cui, 2024. "The Impact of Economic Policy Uncertainty on Systemic Risk in the Fintech Industry: Evidence from Crisis Events and the COVID-19 Pandemic," Financial Economics Letters, Anser Press, vol. 3(1), pages 40-51, January.
    • Handle: RePEc:bba:j00007:v:3:y:2024:i:1:p:40-51:d:291
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    References listed on IDEAS

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    1. Fung, Derrick W.H. & Lee, Wing Yan & Yeh, Jason J.H. & Yuen, Fei Lung, 2020. "Friend or foe: The divergent effects of FinTech on financial stability," Emerging Markets Review, Elsevier, vol. 45(C).
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    1. Zhou, Fuqin & Chang, Aichih (Jasmine) & Shi, Jim, 2024. "How the Economic Policy Uncertainty (EPU) impacts FinTech: The implication of P2P lending markets," Finance Research Letters, Elsevier, vol. 70(C).

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