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Fintech Application and Bank Risk-Taking: Evidence from Chinese City Commercial Banks

In: Proceedings of the 2022 International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2022)

Author

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  • Pengqin Li

    (Nanjing Normal University, Business School)

Abstract

Fintech is reshaping the entire financial industry, dramatically changing the operation model of traditional finance. Traditional commercial banks are confronted with challenges and opportunities as a result of fintech. The development of fintech has resulted in great uncertainty in the realm of bank security, and thus clarifying the nexus between fintech application and bank risk-taking makes sense. Using a text mining technique, this study created a comprehensive index to quantify each sample bank's specific fintech application. With relevant data, this study designed a regression model with a few variables and compared the results to the current situation in China. According to the findings, fintech application and bank credit risk-taking have an inverted U connection. The fintech application initially elevates credit risk taken by banks; but, as fintech application grows more advanced, it will have the opposite effect on bank credit risk-taking, lowering bank non-performing loan rates. Furthermore, this research demonstrates that bank size, deposit-asset rate, and ROA indicators all lessen credit risk, whereas the loan-asset rate strengthens it. The finding suggests that it is advantageous to accelerate the integration of fintech and commercial banks. Banks should exploit the chances presented by the fintech revolution and execute a digital transformation strategy.

Suggested Citation

  • Pengqin Li, 2022. "Fintech Application and Bank Risk-Taking: Evidence from Chinese City Commercial Banks," Advances in Economics, Business and Management Research, in: Faruk Balli & Au Yong Hui Nee & Sikandar Ali Qalati (ed.), Proceedings of the 2022 International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2022), pages 850-859, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-052-7_97
    DOI: 10.2991/978-94-6463-052-7_97
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    Cited by:

    1. Areej Hijazin & Nemer Badwan, 2026. "The Impact of Financial Technology Development (FinTech) on the Profitability of Conventional and Islamic Banks Listed on the Palestine Stock Exchange," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 17(1), pages 138-168, February.

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