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Fintech-based financial inclusion and bank risk-taking: Evidence from OIC countries

Hasanul Banna, M. Kabir Hassan and Mamunur Rashid

Journal of International Financial Markets, Institutions and Money, 2021, vol. 75, issue C

Abstract: Financial inclusion has gone beyond the rhetoric surrounding social development and financial stability, but also expanding into pathos of arbitrage benefits made from cheap retail deposits by large banks and banks from technologically developed regions. This study investigates whether a higher degree of fintech-based financial inclusion (FFI) intensifies banks’ risk-taking by analysing data from 534 banks from 24 OIC countries. The results indicate that higher degree of FFI controls bank’s risk-taking behaviour. The nexus turns stronger in the post-industrial revolution 4.0 (IR4.0) era. Our results are robust across multiple proxies and estimation methods. We discuss how competition surrounding investing in fintech may expose the banks towards severe uncertainty.

Keywords: Banks’ risk-taking; Z-score; Fintech; Financial inclusion; Financial stability (search for similar items in EconPapers)
JEL-codes: G21 G28 G32 O33 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.intfin.2021.101447

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Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely

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