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Will fintech enhance financial regulation?

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  • Zhao, Yuliang
  • Ma, Furong

Abstract

Financial technology (fintech) can create significant uncertainty in financial regulations. This study examines the impact of fintech on financial regulation in Chinese provinces from 2011 to 2021. The results show that fintech development improves financial regulation. To address potential endogeneity issues, we employed multiple methods including instrumental variables, PSM-DiD, and placebo tests. The results remained consistent with our main findings, indicating that our conclusions are robust after mitigating some endogeneity problems. However, certain sources of endogeneity may not be fully resolved. We further demonstrate that local government debt and bank competition mediate the relationship between fintech and financial regulation. The heterogeneity analysis shows that the positive effect of financial regulation is more significant in western China and in provinces with lower levels of technological innovation. Our findings complement the literature on the impact mechanism between fintech and financial regulation and provide more targeted and feasible recommendations for enterprises.

Suggested Citation

  • Zhao, Yuliang & Ma, Furong, 2025. "Will fintech enhance financial regulation?," Research in International Business and Finance, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:riibaf:v:78:y:2025:i:c:s0275531925002612
    DOI: 10.1016/j.ribaf.2025.103005
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    1. Pampurini, Francesca & Quaranta, Anna Grazia & Onorato, Grazia, 2025. "Does efficiency matter in M&A of FinTech firms?," Research in International Business and Finance, Elsevier, vol. 78(C).

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