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Chinese Fintech Innovation and Regulation

Author

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  • Martin Chorzempa
  • Yiping Huang

Abstract

Nowhere has financial technology or “fintech” become larger or as transformative as in China. Fintech, largely developed by technology companies, rapidly turned China from a largely cash‐based, backward financial system to a fintech leader globally. At the same time, China's government created an environment conducive to innovation. China's experience with fintech is a rich repository of lessons for other countries aiming to modernize their financial service industries and “leapfrog” up to advanced economies in some respects. It shows how clever reforms can overcome the lack of competition for financial incumbents, but also the mechanisms necessary to ensure regulation and supervision are sufficient for the risks of financial innovation. Finally, policy debates and solutions in China around the power of big tech, including in finance, have relevance to a world increasingly forced to grapple with these issues.

Suggested Citation

  • Martin Chorzempa & Yiping Huang, 2022. "Chinese Fintech Innovation and Regulation," Asian Economic Policy Review, Japan Center for Economic Research, vol. 17(2), pages 274-292, July.
    • Handle: RePEc:bla:asiapr:v:17:y:2022:i:2:p:274-292
    DOI: 10.1111/aepr.12384
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    References listed on IDEAS

    as
    1. Yiping Huang & Xun Wang, 2011. "Does Financial Repression Inhibit or Facilitate Economic Growth? A Case Study of Chinese Reform Experience," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73, pages 833-855, December.
    2. Harald Hau & Yi Huang & Hongzhe Shan & Zixia Sheng, 2021. "FinTech Credit and Entrepreneurial Growth," Swiss Finance Institute Research Paper Series 21-47, Swiss Finance Institute.
    3. Erik Feyen & Jon Frost & Leonardo Gambacorta & Harish Natarajan & Matthew Saal, 2021. "Fintech and the digital transformation of financial services: implications for market structure and public policy," BIS Papers, Bank for International Settlements, number 117.
    4. Jon Frost & Leonardo Gambacorta & Yi Huang & Hyun Song Shin & Pablo Zbinden, 2019. "BigTech and the changing structure of financial intermediation," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 34(100), pages 761-799.
    5. Gambacorta, Leonardo & Huang, Yiping & Qiu, Han & Wang, Jingyi, 2024. "How do machine learning and non-traditional data affect credit scoring? New evidence from a Chinese fintech firm," Journal of Financial Stability, Elsevier, vol. 73(C).
    6. Xiuping Hua & Yiping Huang, 2021. "Understanding China’s fintech sector: development, impacts and risks," The European Journal of Finance, Taylor & Francis Journals, vol. 27(4-5), pages 321-333, March.
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