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Updated: Jun 10, 2025

An R-Based Landscape Validation of a Competing Risk Model
Published on: September 16, 2022
FinTech regulation and banks' risk-taking: Evidence from China
Zhenlun Wu1, Lisha Li1, Bo Wang1
1School of Finance, Southwestern University of Finance and Economics, Chengdu, Sichuan, 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-difference-in-difference) analysis. By focusing on the external effects of FinTech regulation, we aim to shed light on how regulatory gaps impact the formal financial system and highlight the importance of effectively regulating emerging financial entities.
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