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How does the development of fintech affect financial efficiency? Evidence from China

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  • Yi Hu Wu
  • Liang Bai
  • Xiaohui Chen

Abstract

The rapid development of fintech is transforming the global financial system. However, how does fintech impact financial efficiency? Based on the technology spillover theory, this study analysed the theoretical mechanism of fintech’s impact on financial efficiency and used the text mining method to construct a fintech level index for each province in China. Using interprovincial panel data from 2008 to 2018, the study empirically tested the relationship between fintech development and financial efficiency. The results show that technology spillover theory can adequately explain the impact of financial technology on financial efficiency and that there is a U-shaped nonlinear relationship between fintech development and financial efficiency. Further analysis shows that financial decentralisation moderates the marginal effect of fintech on financial efficiency. The effect of fintech on financial efficiency is more significant in regions with greater financial decentralisation. Therefore, at this stage, the study recommends that we actively embrace fintech, continuously deepen the integration of technology and finance, promote improvement in financial efficiency, and expand the positive role of local governments in technological innovation.

Suggested Citation

  • Yi Hu Wu & Liang Bai & Xiaohui Chen, 2023. "How does the development of fintech affect financial efficiency? Evidence from China," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 36(2), pages 2106278-210, December.
    • Handle: RePEc:taf:reroxx:v:36:y:2023:i:2:p:2106278
    DOI: 10.1080/1331677X.2022.2106278
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    Citations

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    Cited by:

    1. Chen, Hong & Hu, Shangui & Cai, Yuqing, 2024. "Driving effect of fintech on firm green innovation in China's strategic emerging industries: The mediating role of digital transformation," International Review of Economics & Finance, Elsevier, vol. 96(PA).
    2. Budi Setiawan & Dien Triana & Ummu Salma Azizah & Andi Sri Wahyuni & Vijay Victor & Robert Jeyakumar Nathan & Maria Fekete-Farkas, 2025. "Financial technology (Fintech) innovation and financial inclusion: comparative study of urban and rural consumers post-Covid-19 pandemic," Journal of Innovation and Entrepreneurship, Springer, vol. 14(1), pages 1-28, December.
    3. Drago, Carlo & Minnetti, Francesco & Di Nallo, Loris & Manzari, Alberto, 2025. "Uncovering patterns of fintech behavior in Italian banks: A multidimensional statistical analysis," Research in International Business and Finance, Elsevier, vol. 73(PA).
    4. Xiao, Biyun & Li, Haibo, 2025. "Financial efficiency, green innovation and green total factor productivity," Finance Research Letters, Elsevier, vol. 76(C).
    5. Ngo, Xuan Thanh & Le, Kim-Anh & Nguyen, Thanh Trung & Nguyen, Khoa Dang, 2025. "Does FinTech curb bank risk-taking? Insights from an emerging economy," Finance Research Letters, Elsevier, vol. 86(PF).
    6. Zhu, Yi & Lin, Yangyi & Tan, Yanyu & Liu, Bin & Wang, Hao, 2024. "The potential nexus between fintech and energy consumption: A new perspective on natural resource consumption," Resources Policy, Elsevier, vol. 89(C).
    7. Pampurini, Francesca & Pezzola, Annagiulia & Quaranta, Anna Grazia, 2024. "Lending business models and FinTechs efficiency," Finance Research Letters, Elsevier, vol. 65(C).
    8. Alsedrah, Ibrahim Tawfeeq, 2024. "Fintech and green finance revolutionizing carbon emission reduction through green energy projects in mineral-rich countries," Resources Policy, Elsevier, vol. 94(C).
    9. Farhan Furqan & Christian Haposan Pangaribuan & Santo Tjhin & Calista Luhur, 2025. "Buy now, pray later? Demystifying unrestrained spending in the age of BNPL," Jurnal Siasat Bisnis, Management Development Centre (MDC) Department of Management, Faculty of Business and Economics Universitas Islam Indonesia, vol. 29(1), pages 15-26.
    10. Koranteng, Barbara & You, Kefei, 2024. "Fintech and financial stability: Evidence from spatial analysis for 25 countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 93(C).
    11. Wang, Tianchen & Xie, Ziliang & Du, Chaofei & Cheng, Zhangfan, 2025. "Financial technology empowerment, investor attention, and corporate investment efficiency," International Review of Financial Analysis, Elsevier, vol. 107(C).
    12. Wanyan, Ruiyun & Zhao, Tongpu, 2025. "The dual path of fintech in alleviating ESG decoupling: A dynamic balance between short-term and long-term effects," Finance Research Letters, Elsevier, vol. 86(PB).
    13. Ortega Perals, Paula & Maturo, Fabrizio & Cruz Rambaud, Salvador & Sánchez García, Javier, 2025. "The moderating role of government intervention in the relationship between investment in artificial intelligence and the development of financial markets," International Review of Economics & Finance, Elsevier, vol. 103(C).
    14. Jiyuan Zhang & Shirong Zhao & Guangshun Qiao, 2026. "Fintech and bank efficiency: a robust nonparametric approach for Chinese commercial banks," Journal of Productivity Analysis, Springer, vol. 65(1), pages 1-21, March.
    15. Li, Feifei & Xue, Ruile & Du, Mingyue & Liu, Yuxing, 2025. "Fintech, banking competition and corporate leverage manipulation," Pacific-Basin Finance Journal, Elsevier, vol. 94(C).

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