Less Cash, Less Theft? Evidence from Fintech Development in the People’s Republic of China

Hongze Jiang and Pinghan Liang
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Hongze Jiang: Asian Development Bank Institute

No 1282, ADBI Working Papers from Asian Development Bank Institute

Abstract: We investigate the impact of fintech development on an important type of crime: theft. Based on Becker’s rational criminal theory, we suggest that fintech development could mitigate theft activities by increasing the earnings from legitimate work, relaxing potential criminals’ financial constraints, and reducing the expected gains from theft. We established a unique dataset containing information on more than 1 million theft defendants during the period 2014–2018, which we extracted from 874,000 judgment statements. Then, we aggregated them to construct a city-year panel of theft activities and matched it with the city-level economic activities and Fintech development level. The results show that a 1 standard deviation increase in the fintech development level has a significant association with a 0.39 standard deviation decrease in thefts’ density. Robustness checks and instrumental variable estimation support the main results. Further, the development of fintech reduces the density of thefts by reducing residents’ cash holding and providing more job opportunities. Finally, we utilized a nationally representative household survey to estimate the cost of theft for households, finding that victims suffer from more mental health problems, increasing their health expenditure. Our results suggest an unexpected source of welfare gain from the development of fintech: an improvement in public security.

Keywords: fintech; theft; crime; People’s Republic of China (search for similar items in EconPapers)
JEL-codes: C81 G59 K14 K42 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2021-08
New Economics Papers: this item is included in nep-cna, nep-fdg, nep-hea, nep-law and nep-pay
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