You, Kefei ORCID: https://orcid.org/0000-0001-7253-5838, Koranteng, Barbara ORCID: https://orcid.org/0009-0005-8687-9881 and Klacso, Ján (2026) FinTech development and bank credit risk: spatial spillovers and the role of financial system structure. Research in International Business and Finance (RIBAF), 91:103626. ISSN 0275-5319 (Print), 1878-3384 (Online) (doi:10.1016/j.ribaf.2026.103626)

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Abstract

Rapid FinTech development is reshaping global financial systems, yet the understanding of its implications for the level of risk undertaken by banks remains ambiguous. This study examines the relationship between FinTech development and credit risk in the banking sector across 63 countries from 2013 to 2021. We distinguish between bank-based and market-based financial system structures, as well as between financially developed and underdeveloped economies within these two structures. Furthermore, we employ spatial models to account for cross-border spillovers in bank risk and adopt a novel measure of FinTech development that is based on FinTech investment activities. Our findings first reveal the existence of positive spatial dependence in bank credit risk across countries, highlighting the necessity of spatial analysis. Second, using the Spatial Durbin Model, which provides the best fit for our data, we show that FinTech development reduces bank credit risk both domestically and internationally. Third, such credit risk-mitigating effect of FinTech is concentrated in bank-based financial systems, whereas it is absent in market-based structures. Fourth, within bank-based economics, this effect is more pronounced in financially underdeveloped countries compared with those with well-developed financial markets. Finally, our robustness checks support these findings. This paper highlights FinTech’s potential in mitigating bank credit risk and underscores the importance of considering financial structures and spatial interdependence in assessing bank risk.

Item Type:	Article
Uncontrolled Keywords:	FinTech, financial structure, bank-based financial system, market-based financial system, spatial models
Subjects:	H Social Sciences > H Social Sciences (General) 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
Related URLs:	https://doi.org/10.1016/j.ribaf.2026.103...
Last Modified:	24 Sep 2026 16:03
URI:	https://gala.gre.ac.uk/id/eprint/54439

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