Your next bank is not necessarily a bank: FinTech expansion and bank branch closures

Kaibin Yuan, Wanli Li and Weijun Zhang

Economics Letters, 2023, vol. 222, issue C

Abstract: This paper presents novel evidence on the effect of FinTech expansion on bank branch closures by exploiting plausibly exogenous variation in FinTech expansion generated by the largest FinTech giant in China. We find that FinTech expansion leads to a rise in both the number and share of branch closures. The debranching effects are significant only for those product ranges overlapped between the bank and FinTech company, implying that the bank’s presumably advantageous products can, in fact, be replaced by new rivals from FinTech. Our findings provide a window to understand how the global debranching trend occurs.

Keywords: FinTech; Bank branch closures; Banking desert; Financial development (search for similar items in EconPapers)
JEL-codes: G21 G23 O16 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:222:y:2023:i:c:s0165176522004220

DOI: 10.1016/j.econlet.2022.110948

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