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Fintech, bank concentration and commercial bank profitability: Evidence from Chinese urban commercial banks

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  • Li, Linwen
  • Gao, Wei
  • Gu, Wanhong

Abstract

This article empirically examines the non-linear relationship and moderating effect between fintech, bank concentration and commercial bank profitability using unbalanced panel data of 131 urban commercial banks in China from 2010 to 2021. The results show that the relationship between fintech and commercial bank profitability exhibits a non-linear relationship of inhibition followed by promotion. Bank concentration has a negative moderating effect on the impact of fintech on commercial bank profitability, and fintech has a crowding-out effect on banks' profits as bank concentration rises. The findings of this paper help to respond to the current debate on fintech and traditional banking.

Suggested Citation

  • Li, Linwen & Gao, Wei & Gu, Wanhong, 2023. "Fintech, bank concentration and commercial bank profitability: Evidence from Chinese urban commercial banks," Finance Research Letters, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323006062
    DOI: 10.1016/j.frl.2023.104234
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    References listed on IDEAS

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    Cited by:

    1. Ni, Tingting & Ren, Yi & Choi, Junghwan, 2024. "Deposit insurance system and commercial bank profitability: A quasi-natural experiment based on the deposit insurance regulations," Finance Research Letters, Elsevier, vol. 67(PA).
    2. Lee, Chien-Chiang & Zhang, Xiaoli & Lee, Chi-Chuan, 2024. "Does climate change matter for bank profitability? Evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 74(C).
    3. Li, Taoying & Peng, Mengyin & Zhang, Jianjiang & Zheng, Long & Chen, Qiang, 2024. "Legal environment and natural resource dependence: The role of fintech and green innovation in China," Resources Policy, Elsevier, vol. 90(C).
    4. Khan, Habib Hussain & Kutan, Ali M. & Qureshi, Fiza, 2024. "Fintech integration: Driving efficiency in banking institutions across the developing nations," Finance Research Letters, Elsevier, vol. 67(PA).
    5. Dong, Hao & Zheng, Yingrong & Tang, Yuhong, 2024. "Impact of FinTech on the industrial structural transformation: Evidence from China's resource-based cities," Resources Policy, Elsevier, vol. 91(C).
    6. Chai, Yuanzhe & Sun, Suchao, 2024. "Can the development of Fintech mitigate non-performing loan risk?," Finance Research Letters, Elsevier, vol. 67(PB).
    7. Hodula, Martin, 2024. "Beyond innovation: Fintech credit and its ripple effects on traditional banking profitability," Finance Research Letters, Elsevier, vol. 63(C).

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