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Financial connectedness in the digital age: The impact of regional FinTech development

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  • Wang, Weijia
  • Ni, He

Abstract

This study investigates how FinTech development affects financial institutions’ network connectedness and systemic risk in China’s rapidly digitalizing financial sector. While existing research examines FinTech’s impact on financial stability, these approaches inadequately address how FinTech reshapes broader financial network structures. Using data from Chinese listed financial institutions from 2011 to 2021, we measure connectedness through stock-return interconnections and employ panel regression analysis to examine the relationship with regional FinTech development. Our analysis reveals that FinTech development significantly enhances financial institutions’ network connectedness, with this impact moderated by industry concentration and internal FinTech innovation. The effects are stronger in digitization and usage depth dimensions and more pronounced in non-state-owned institutions. These findings demonstrate that FinTech creates new systemic risk transmission channels through digital platform effects and technological interdependence. The results provide crucial insights for regulatory frameworks addressing systemic risk in financial digitalization.

Suggested Citation

  • Wang, Weijia & Ni, He, 2025. "Financial connectedness in the digital age: The impact of regional FinTech development," Economic Modelling, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:ecmode:v:152:y:2025:i:c:s0264999325002858
    DOI: 10.1016/j.econmod.2025.107290
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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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