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How fintech impacts pre‐ and post‐loan risk in Chinese commercial banks

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  • Ailian Zhang
  • Shuyao Wang
  • Bai Liu
  • Pei Liu

Abstract

Due to information asymmetry in the lending market, credit activities inevitably cause pre‐ and post‐loan risk in banks. To explore whether these risks can be alleviated by fintech and study its specific mechanism from the perspective of managers, we investigate on a sample from the establishment of fintech subsidiaries in Chinese commercial banks during 2014–2018. The results show that fintech can alleviate pre‐loan risk associated with credit activities, and this negative effect is more pronounced in banks with higher level of managerial ownership. As the control of post‐loan risk is more dependent on the regulators, fintech in banks has no significant effect on reducing post‐loan risk associated with credit activities. This paper adds empirical evidence on the role of fintech in banks.

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  • Ailian Zhang & Shuyao Wang & Bai Liu & Pei Liu, 2022. "How fintech impacts pre‐ and post‐loan risk in Chinese commercial banks," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 2514-2529, April.
    • Handle: RePEc:wly:ijfiec:v:27:y:2022:i:2:p:2514-2529
    DOI: 10.1002/ijfe.2284
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    Cited by:

    1. Deli Wang & Ke Peng & Kaiye Tang & Yewei Wu, 2022. "Does Fintech Development Enhance Corporate ESG Performance? Evidence from an Emerging Market," Sustainability, MDPI, vol. 14(24), pages 1-21, December.
    2. Hongyu Li & Zhiqiang Lu & Qili Yin, 2023. "The Development of Fintech and SME Innovation: Empirical Evidence from China," Sustainability, MDPI, vol. 15(3), pages 1-14, January.
    3. He, Miao & Song, Ge & Chen, Qianqian, 2023. "Fintech adoption, internal control quality and bank risk taking: Evidence from Chinese listed banks," Finance Research Letters, Elsevier, vol. 57(C).
    4. Chang Xie & Chuanzhe Liu, 2022. "The Nexus between Digital Finance and High-Quality Development of SMEs: Evidence from China," Sustainability, MDPI, vol. 14(12), pages 1-20, June.
    5. Tan, Zhuohong & Wang, Handi & Hong, Yunzhe, 2023. "Does bank FinTech improve corporate innovation?," Finance Research Letters, Elsevier, vol. 55(PA).
    6. Fang, Yi & Wang, Qi & Wang, Fan & Zhao, Yang, 2023. "Bank fintech, liquidity creation, and risk-taking: Evidence from China," Economic Modelling, Elsevier, vol. 127(C).

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