You, Kefei ORCID: https://orcid.org/0000-0001-7253-5838, Koranteng, Barbara and Jan, Klacso (2025) Fintech and bank credit risk: does financial structure matter? Evidence from spatial analysis. [Working Paper]

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Abstract

This study examines the impact of FinTech on bank credit risk across 63 countries from 2013 to 2021. We employ a novel measure based on FinTech investment activities to directly capture FinTech development. The analysis distinguishes between bank-based and market-based financial systems to assess whether FinTech’s influence on bank credit risk varies in different financial structures. We account for spatial dependence in bank risk across countries by utilising various spatial models. Our findings first reveal the existence of positive spatial dependence in bank credit risk across countries. It implies that risk in the banking sector has a positive spillover effect to neighbouring countries, thereby validating the necessity of spatial analysis. Second, utilising the Spatial Durbin Model, which best describes our data, we find that FinTech reduces bank credit risk both domestically and across borders. Third, this risk-reducing effect of FinTech is predominantly driven by economies with bank-based financial systems, whereas it is absent in those with market-based financial structures. Finally, within bank-based countries, the credit risk-mitigating impact of FinTech is more pronounced in financially underdeveloped economies compared to those with well-developed financial markets.

Item Type:	Working Paper
Uncontrolled Keywords:	FinTech, financial structure, bank-based financial system, market-based financial system, spatial models
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HG Finance
Faculty / School / Research Centre / Research Group:	Greenwich Business School Greenwich Business School > Political Economy, Governance, Finance and Accountability (PEGFA) Journal of Economic Literature Classification > Political Economy, Governance, Finance and Accountability (PEGFA) Greenwich Business School > School of Accounting, Finance and Economics
Last Modified:	24 Jul 2026 13:49
URI:	https://gala.gre.ac.uk/id/eprint/53979

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