The impact of Fintech on the nexus between household debt and financial crises: A global perspective

Gecheng Yuan, Jie Fang and Yongping Sun

Economic Modelling, 2024, vol. 130, issue C

Abstract: This study investigates whether fintech development shapes the nexus between household debt and financial crises. Prior research has demonstrated a positive relationship between household debt and financial crises but has neglected to explore the heterogeneity of this effect resulting from the rapid fintech development. We used a dataset of 100 countries from 2006 to 2019 and revealed that fintech development elevates the probability of a household debt expansion resulting in a financial crisis. This effect primarily operates through increased risk-taking among traditional banks, which tend to relax their credit standards to compete with fintech lenders. Furthermore, the amplification effect of fintech development is more pronounced in countries characterized by more developed financial systems, more advanced information-sharing systems, less stringent financial regulations, and higher digitalization. These findings have enriched our understanding of how fintech influences household credit quality, providing insights into its economic consequences from the vantage point of financial crises.

Keywords: Fintech development; Household debt expansion; Financial crises; Financial regulation; Information-sharing system (search for similar items in EconPapers)
JEL-codes: G11 G21 G23 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:130:y:2024:i:c:s0264999323004017

DOI: 10.1016/j.econmod.2023.106589

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