Impact Mechanism and Moderating Effects of Fintech Innovation on Bank Risk-Taking Behavior

Purpose: This study examines impact mechanisms and moderating roles of fintech innovation in influencing bank risk-taking behavior while filling significant gaps in literature on how technology adoption affects banking risk patterns under different contextual conditions. Methodology: We utilize panel data regression analysis on 180 Chinese commercial banks from 2015 to 2023 while forming complete fintech innovation indices from principal component analysis and analyzing various risk aspects including credit risk, operational risk, and multi-index risk measures. We include interactive terms in our empirical structure for testing moderating roles of regulatory stringency, digital transformation maturity, and macroeconomic uncertainty. Findings: Technological innovation considerably lowers exposure to credit risk with non-performing loan levels dropping by 0.127 percentage points for every technological adoption unit. However, these roles turn out to be considerably moderated by contextual conditions: risk-mitigating role of fintech innovation gets strengthened under stricter controls, digital maturity induces complementarity impacts in favor of advanced adopter groups while ultimately lessening fintech effectiveness by around 45% under crisis conditions. Conclusion: The fintech-bank risk nexus is conditionally complex with different sets of contextual conditions determining whether technological innovations inflate or erode banking sector resilience. Practical Implications: Financial institutions need to implement sequential digital transformation policies along with their stringency of controls with respect to institutions' capabilities while policymakers need to formulate adaptive regulating conditions that note conditional fintech-risk relationships while encouraging responsible innovation trajectories.

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Publication Details

Journal
Scientific journal of economics and management research.
Published
2025-09-23
DOI
https://doi.org/10.54691/7n0mpg85
Primary Topic
FinTech, Crowdfunding, Digital Finance
Type
article
Field-Weighted Citation Impact
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article

Impact Mechanism and Moderating Effects of Fintech Innovation on Bank Risk-Taking Behavior

Yiqing Yang
Scientific journal of economics and management research.
FinTech, Crowdfunding, Digital Finance
article

Impact Mechanism and Moderating Effects of Fintech Innovation on Bank Risk-Taking Behavior

Yiqing Yang
article en

Abstract

Purpose: This study examines impact mechanisms and moderating roles of fintech innovation in influencing bank risk-taking behavior while filling significant gaps in literature on how technology adoption affects banking risk patterns under different contextual conditions. Methodology: We utilize panel data regression analysis on 180 Chinese commercial banks from 2015 to 2023 while forming complete fintech innovation indices from principal component analysis and analyzing various risk aspects including credit risk, operational risk, and multi-index risk measures. We include interactive terms in our empirical structure for testing moderating roles of regulatory stringency, digital transformation maturity, and macroeconomic uncertainty. Findings: Technological innovation considerably lowers exposure to credit risk with non-performing loan levels dropping by 0.127 percentage points for every technological adoption unit. However, these roles turn out to be considerably moderated by contextual conditions: risk-mitigating role of fintech innovation gets strengthened under stricter controls, digital maturity induces complementarity impacts in favor of advanced adopter groups while ultimately lessening fintech effectiveness by around 45% under crisis conditions. Conclusion: The fintech-bank risk nexus is conditionally complex with different sets of contextual conditions determining whether technological innovations inflate or erode banking sector resilience. Practical Implications: Financial institutions need to implement sequential digital transformation policies along with their stringency of controls with respect to institutions' capabilities while policymakers need to formulate adaptive regulating conditions that note conditional fintech-risk relationships while encouraging responsible innovation trajectories.

Scientific journal of economics and management research.Vol. 7(9)
University of Macau (MO)
Openalex Percentile: Top 58%
FinTech, Crowdfunding, Digital Finance
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