Beyond innovation: Fintech credit and its ripple effects on traditional banking profitability

Martin Hodula

Finance Research Letters, 2024, vol. 63, issue C

Abstract: This study examines the relationship between fintech credit growth and traditional banking sector profitability. It finds a robust negative relationship between the two, suggesting that a rise of alternative credit lines could rival traditional banking and even lead to subdued bank profitability. The negative relationship is stronger for banking sectors that are more concentrated and operate with higher interest margins. These results prompt strategic considerations for banks, such as partnerships and innovation.

Keywords: Banking; Competition; Digital lending; Fintech; Profitability (search for similar items in EconPapers)
JEL-codes: D31 D63 E51 G23 O31 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324003374

DOI: 10.1016/j.frl.2024.105307

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