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FinTech: The disruptive force reducing bank competition pressure

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  • Zhang, Xudong
  • Li, Zhihui

Abstract

This study develops a news-based FinTech index and evaluates the bank competition pressure using a weighted branch ratio. Analyzing data from 276 Chinese banks from 2011 to 2022, we find that adopting FinTech effectively alleviates competition pressure among banks in local markets. This effect can be attributed to three primary mechanisms: enhanced cost efficiency, upgraded human resource structure, and expanded business scope and customer base. Additionally, FinTech exerts a greater influence on banks with lower state-owned equity, those facing stricter regulatory policies, and banks operating in larger informal financial markets.

Suggested Citation

  • Zhang, Xudong & Li, Zhihui, 2025. "FinTech: The disruptive force reducing bank competition pressure," Emerging Markets Review, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:ememar:v:65:y:2025:i:c:s1566014124001328
    DOI: 10.1016/j.ememar.2024.101237
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    More about this item

    Keywords

    Bank FinTech; Bank competition pressure; Cost efficiency; Human resource structure; Financial innovation;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • 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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