Fintech and Economic Policy Uncertainty Integration: Driving Efficiency in Commercial Banks through the Lens of ARDL Approaches

The financial landscape of Pakistan is changing due to the increased accessibility, affordability, and security of FinTech services. This change is essential for raising the standard of living for Pakistan's economic prospects and certain contributing factors to FinTech. This paper investigates the symmetric and asymmetric relationship between Fintech and economic policy uncertainty, bank variability, and governance quality in commercial banks of Pakistan from 2014 to 2020, considering linearity and non-linearity in the data. The data has been converted to monthly frequency, and the Autoregressive distributed lag (ARDL) and nonlinear autoregressive distributed lag (N- ARDL) models have been applied to address long- and short-run associations. The study results reveal that EPU and bank variability have an asymmetric relationship with Fintech during the long run. In contrast, bank variability is connected during the long and short run. Furthermore, governance quality shows a symmetric relationship with Fintech in the long and short run. However, based on the findings of the error correction framework, there is no significant association in the long run. This paper concludes that Fintech, economic policy uncertainty, and bank variability have an asymmetric relationship, while GQ and Fintech are symmetrically associated. Moreover, it contributes to the existing literature by shedding light on the factors affecting Fintech services in commercial banks along with the financial and economic implications for investors, government, regulatory authorities, policymakers, and banks being institutional investors.