The Impact Of Fintech Development On Commercial Banks’ Risk-taking

Fintech is a sword of "both opportunities and challenges" for commercial banks.The rapid development of financial technology has led to the transformation and upgrading of commercial banks,which brings huge profits and convenience to commercial banks,but also brings a series of challenges to banks.Today,with the rapid development of fintech,it is important to study the impact of fintech on the risk-taking of commercial banks in China,not only to promote the sound development of fintech in China,but also to provide countermeasures for commercial banks’ risk management and further promote the high-quality development of the financial system in the era of digital economy.Based on the existing literature,this paper defines the concept of fintech and establishes an innovative index of China’s fintech development level by combining three dimensions: quantity,quality and environment.The paper first analyzes the multi-faceted impact of fintech on commercial banks’ risk-taking through theoretical analysis,and then establishes a mathematical model for derivative argumentation so as to put forward the corresponding propositions.Then the empirical test is conducted using panel data of 173 commercial banks in China from 2013-2021.The results show that,first,the risk-taking of commercial banks forms an inverted "U" shape with the gradual development of fintech.Second,the impact of fintech development on commercial banks’ risk-taking varies across sizes,systems and geographies.Third,fintech development affects bank risk-taking through three channels: bank net interest margin,bank information-seeking ability,and bank management efficiency.This paper makes recommendations for commercial banks to develop fintech based on the findings of the study.Compared with existing studies,the main contributions of this paper are: first,the construction of an index of innovative fintech development level.Based on the text mining method,this paper selects 17 indicators from multiple dimensions so that they contain comprehensive information on the quantity,quality and development environment of fintech development.Factor analysis is also used to process the index data to synthesize the final index,which is more comprehensive and objective for the measurement of fintech.Second,we study the channels through which the development of fintech affects banks’ risk-taking from multiple perspectives,and make a scientific derivation from three aspects: market competition,information-seeking ability and management efficiency,which complements the relevant theories through mathematical models.