Fintech credit, bank regulations and bank performance: a cross-country analysis
Asia-Pacific Journal of Business Administration
ISSN: 1757-4323
Article publication date: 9 November 2021
Issue publication date: 22 November 2022
Abstract
Purpose
This study is the first to investigate whether fintech credit influences bank performance, considering the moderating impact of bank regulations.
Design/methodology/approach
This study uses an aggregate dataset of 73 countries from 2013 to 2018 to examine the nexus between fintech credit, bank regulations and bank performance. For robustness tests, the authors introduce different proxies of fintech credit, perform sub-sample analysis and substitute control variables, as well as conduct their empirical strategy to tackle potential endogeneity issue.
Findings
The authors document some significant findings. First, the authors’ evidence implies that fintech credit tends to reduce bank profitability, while improving bank risk-related performance. This suggests that as fintech grows, it competes with banks and takes some share of profits, but it also benefits banks in terms of stability. Second, stricter regulations contribute positively to bank stability. Third, the authors argue that the impact of fintech credit on bank performance may depend on the degree of banking regulation, and find that fintech credit would impose a more positive influence on bank stability as more stringent banking regulation is present.
Originality/value
This study is the first to investigate whether fintech credit influences bank performance, considering the moderating impact of bank regulations. The findings imply that fintech credit tends to be more beneficial when bank regulations become stricter. Therefore, they bring relevant implications to the regulators, as well as bank and fintech managers with regard to the potential cooperation.
Keywords
Acknowledgements
The research is financed by University of Economics and Law, Vietnam National University Ho Chi Minh City, Vietnam.
Declare of interest: None.
Citation
Nguyen, L., Tran, S. and Ho, T. (2022), "Fintech credit, bank regulations and bank performance: a cross-country analysis", Asia-Pacific Journal of Business Administration, Vol. 14 No. 4, pp. 445-466. https://doi.org/10.1108/APJBA-05-2021-0196
Publisher
:Emerald Publishing Limited
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