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How asset transformation matters for the fate of technology-led banks?

Author

Listed:
  • Maxence Miéra

    (Univ Artois, CNRS, IESEG School of management, Univ Lille, UMR 9221, Lille Economie Management (LEM))

  • Nicolas Bédu

    (ART-Dev, Univ Montpellier, CNRS, Univ Paul Valéry Montpellier 3, Univ Perpignan Via Domitia, CIRAD)

  • Viola Lamani

    (Univ Paul Valéry Montpellier 3, Univ Montpellier, Univ Perpignan, CNRS, CIRAD, ART Dev UMR 5281)

Abstract

This paper examines the efficiency of technology-led banks (i.e. internet banks, mobile banks or FinTech startups offering banking services) in a simple theoretical model using conventional banks as a competitive benchmark. We show that the fate of technology-led banks crucially relies on their level of asset transformation. We identify two critical thresholds of asset transformation in a general contractual setting. The first determines whether technology-led banks are feasible to set up, while the second determines when technology-led banks are at least as attractive as conventional banks.

Suggested Citation

  • Maxence Miéra & Nicolas Bédu & Viola Lamani, 2024. "How asset transformation matters for the fate of technology-led banks?," Economics Bulletin, AccessEcon, vol. 44(1), pages 74-87.
    • Handle: RePEc:ebl:ecbull:eb-23-00328
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    References listed on IDEAS

    as
    1. Franklin Allen & Xian Gu & Julapa Jagtiani, 2021. "A Survey of Fintech Research and Policy Discussion," Review of Corporate Finance, now publishers, vol. 1(3-4), pages 259-339, July.
    2. Basak, Suleyman & Cuoco, Domenico, 1998. "An Equilibrium Model with Restricted Stock Market Participation," The Review of Financial Studies, Society for Financial Studies, vol. 11(2), pages 309-341.
    3. Mankiw, N. Gregory & Zeldes, Stephen P., 1991. "The consumption of stockholders and nonstockholders," Journal of Financial Economics, Elsevier, vol. 29(1), pages 97-112, March.
    4. Huan Tang, 2019. "Peer-to-Peer Lenders Versus Banks: Substitutes or Complements?," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1900-1938.
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    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services

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