Implications of Fintech Developments for Traditional Banks

Kuan-Chieh Chen
Additional contact information
Kuan-Chieh Chen: Department of money and banking, National Chengchi University, No. 64, Sec. 2, Zhinan Rd., Wenshan Dist., Taipei City 116, Taiwan

International Journal of Economics and Financial Issues, 2020, vol. 10, issue 5, 227-235

Abstract: As financial technology has developed, the Chinese government has deregulated banks. The first Internet-only bank was established in 2014, but the effects of Internet-only banking on traditional banks remain unclear. However, we discussed two stages (2009-2014; 2015-2018), namely before and after the entry of Internet-only banking into the financial market. Data envelopment analysis and regression methods were used to evaluate efficiency and performance and observe changes between banks in different periods, of 20 banks. The highlights of our findings are as follows: First, overall bank efficiency has improved since Internet-only banking entered the financial market. Second, in the era of low-interest spreads, banks are diversifying operational income while improving performance and efficiency. Furthermore, with the development of FinTech and competitive pressure, banks should downsize to strengthen their competitiveness and improve their internal environments. Finally, operating income generated by employees has increased, but profits have decreased, implying that employees are highly skilled and efficient. Thus, banks may be required to offer higher salaries, which reduce profits.

Keywords: Internet-only bank; Network DEA; Bank efficiency; Bank performance (search for similar items in EconPapers)
JEL-codes: G19 G20 G29 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
https://www.econjournals.com/index.php/ijefi/article/download/10076/pdf (application/pdf)
https://www.econjournals.com/index.php/ijefi/article/view/10076/pdf (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2020-05-26

Access Statistics for this article

International Journal of Economics and Financial Issues is currently edited by Ilhan Ozturk

More articles in International Journal of Economics and Financial Issues from Econjournals
Bibliographic data for series maintained by Ilhan Ozturk ().