Anchoring Stability: FinTech’s Revolution in Modern Banking

Amid the rapid digital transformation of the financial sector, technological advancements are reshaping traditional banking practices. This study investigates the relationship between FinTech credit and bank stability, proxied by Credit Risk Distance (CRD), within the global banking sector. Specifically, we examine whether FinTech credit increases competitive pressures and financial risk, or whether traditional banks are effectively adapting to these digital disruptions. Using panel data estimation techniques with firm and country-year fixed effects, our results show that increased FinTech credit is associated with higher CRD, indicating a lower likelihood of default and a potential stabilizing effect on bank risk. Sub-sample analyses further compare distressed versus non-distressed banks, as well as highly leveraged versus less-leveraged institutions. Robustness of the findings is confirmed using the System Generalized Method of Moments (System-GMM). These findings contribute to the emerging literature on FinTech and financial stability and offer practical implications for policymakers, bank executives, and investors navigating the evolving digital financial landscape

Authors

Publication Details

Journal
Aledari
Published
2024-12-01
DOI
https://doi.org/10.63355/a7743ja8
Primary Topic
FinTech, Crowdfunding, Digital Finance
Type
article
Field-Weighted Citation Impact
0.00
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article

Anchoring Stability: FinTech’s Revolution in Modern Banking

Brian M. Lucey
Aledari
FinTech, Crowdfunding, Digital Finance
article

Anchoring Stability: FinTech’s Revolution in Modern Banking

Brian M. Lucey
article en

Abstract

Amid the rapid digital transformation of the financial sector, technological advancements are reshaping traditional banking practices. This study investigates the relationship between FinTech credit and bank stability, proxied by Credit Risk Distance (CRD), within the global banking sector. Specifically, we examine whether FinTech credit increases competitive pressures and financial risk, or whether traditional banks are effectively adapting to these digital disruptions. Using panel data estimation techniques with firm and country-year fixed effects, our results show that increased FinTech credit is associated with higher CRD, indicating a lower likelihood of default and a potential stabilizing effect on bank risk. Sub-sample analyses further compare distressed versus non-distressed banks, as well as highly leveraged versus less-leveraged institutions. Robustness of the findings is confirmed using the System Generalized Method of Moments (System-GMM). These findings contribute to the emerging literature on FinTech and financial stability and offer practical implications for policymakers, bank executives, and investors navigating the evolving digital financial landscape

AledariVol. 46(171)
Openalex Percentile: Top 49%
FinTech, Crowdfunding, Digital Finance
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