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An Empirical Study on the Impact of Financial Technology on the Profitability of China’s Listed Commercial Banks

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  • Xue Yuan

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Sarawak, Malaysia
    School of International Economics, Anhui International Studies University, Hefei 231201, China)

  • Chin-Hong Puah

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Sarawak, Malaysia)

  • Dayang Affizzah binti Awang Marikan

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Sarawak, Malaysia)

Abstract

This paper selects 50 listed commercial banks in China from 2012 to 2023 as research samples, and employs the fixed effects model and Hansen’s threshold regression method to systematically examine the impact mechanism and non-linear characteristics of FinTech development on the profitability of commercial banks. The key findings are summarized as follows: (1) FinTech significantly undermines the overall profitability of commercial banks by reshaping the competitive landscape of the industry and intensifying the technology substitution effect. This is primarily reflected in the reduction in traditional interest income and the erosion of market share in intermediary business. (2) Heterogeneity analysis indicates that large state-owned banks and joint-stock banks experience more pronounced negative impacts compared to small and medium-sized banks. (3) Additional research findings reveal a significant single-threshold effect between FinTech and bank profitability, with a critical value of 4.169. When the development level of FinTech surpasses this threshold, its inhibitory effect diminishes substantially, suggesting that after achieving a certain degree of technological integration, commercial banks may partially alleviate external competitive pressures through synergistic effects. This study offers crucial empirical evidence and theoretical support for commercial banks to develop differentiated technology strategies and for regulatory authorities to design dynamically adaptable policy frameworks.

Suggested Citation

  • Xue Yuan & Chin-Hong Puah & Dayang Affizzah binti Awang Marikan, 2025. "An Empirical Study on the Impact of Financial Technology on the Profitability of China’s Listed Commercial Banks," JRFM, MDPI, vol. 18(8), pages 1-22, August.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:8:p:440-:d:1718938
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    References listed on IDEAS

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