 Fintech regulation and bank liquidity creation: Evidence from ChinaShiyu Liu, Bo Wang and Qianqian Zhang Pacific-Basin Finance Journal, 2024, vol. 84, issue C Abstract: Fintech regulation serves as a vital signal for prudential regulation, helping to mitigate market failures caused by Fintech innovation. Using China's 2016 Implementation Plan for the Specific Rectification of Internet Financial Risks, we employ a difference-in-differences identification strategy to investigate the impact of Fintech regulation on banks' liquidity creation. Our paper reveals the following findings: Fintech regulation triggers deposit inflows and lowers reliance on interbank funds, strengthening banks' deposit franchises and risk-transforming functions. By enhancing banks' ability to convert liquid liabilities into illiquid assets, Fintech regulation facilitates liquidity creation, which is crucial for the smooth functioning of the financial system. After controlling for other major regulatory and government-led initiatives, the incremental effect of Fintech regulation on Chinese banking liquidity creation is still apparent. By demonstrating the benefits of Fintech regulation, our research provides a valuable reference for policymakers. Keywords: Fintech regulation; banks' liquidity creation; Deposit franchises (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:84:y:2024:i:c:s0927538x24000271 DOI: 10.1016/j.pacfin.2024.102276 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.