FinTech regulation and banks' risk-taking: Evidence from China.

ABSTRACT: By utilizing China's 2016 Implementation Plan for the Specific Rectification of Internet Financial Risks as an exogenous shock, we employ a difference-in-differences identification strategy to investigate the impact of FinTech regulation on banks' risk-taking. Our findings indicate that FinTech regulation strengthens banks' deposit franchises and funding liquidity. As reliable and interest-rate-insensitive funding sources, higher deposit franchises weaken banks' incentives for risk-taking. Further analysis, conducted to control for the potential interference of other policies, confirms the stable incremental effect of FinTech regulation. Moreover, we find that FinTech regulation tends to benefit banks with higher capital buffers and smaller sizes from a triple difference (difference-in-dif

SUBMITTER: Wu Z 

PROVIDER: S-EPMC11486374 | biostudies-literature | 2024

REPOSITORIES: biostudies-literature