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Exploring the Nexus of Fintech Development, Systematic Risk, and Market Discipline on Financial Stability: Evidence from Jordan

Author

Listed:
  • Al-Majali Mohannad

    (Department of Finance, Amman Arab University, Jordan)

  • Aldalaien Baaeth

    (Department of Finance, Amman Arab University, Jordan)

  • AL-Khazaleh Suhaib

    (Department of Finance, Amman Arab University, Jordan)

  • Al-Smadi Raed

    (Department of Finance, Amman Arab University, Jordan)

Abstract

This research investigates the impact of FinTech innovation on the financial stability of emerging markets, using the case of thirteen Jordanian commercial banks from 2015 to 2022. The study aims to examine how FinTech innovations engage with systemic risk and market discipline in the formation of financial resilience. With a quantitative strategy, regression models subjected borrowing records to examination to test for indirect and direct effects. The findings indicate that FinTech growth is positively correlated with financial stability as systemic risk is a strong mediator that amplifies the positive correlation. In addition, market discipline aids to stabilize the place of FinTech with effective regulation. The study reveals potential threats of concentration and size to systemically significant banks, and prior concentration, specifying that it would be wise to be well-lend with liquidity to avoid a higher risk. The current study offers practical policy recommendations to policymakers and financial institutions in weighing regulation and FinTech innovation in preventing systemic danger and enhancing overall financial stability in emerging economies.

Suggested Citation

  • Al-Majali Mohannad & Aldalaien Baaeth & AL-Khazaleh Suhaib & Al-Smadi Raed, 2025. "Exploring the Nexus of Fintech Development, Systematic Risk, and Market Discipline on Financial Stability: Evidence from Jordan," Economics, Sciendo, vol. 13(2), pages 351-365.
    • Handle: RePEc:vrs:econom:v:13:y:2025:i:2:p:351-365:n:1017
    DOI: 10.2478/eoik-2025-0044
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    More about this item

    Keywords

    FinTech innovation; Systemic risk; Financial stability; Market discipline; Liquidity;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • 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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