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Fintech, Credit Market Competition, and Bank Asset Quality

Ping-Lun Tseng () and Wen-Chung Guo ()
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Ping-Lun Tseng: National Taipei University of Business
Wen-Chung Guo: National Taipei University

Journal of Financial Services Research, 2022, vol. 61, issue 3, No 1, 285-318

Abstract: Abstract This study explores bank screening incentives under credit market competition between traditional banks and a Fintech startup. The bank screening incentives increase with the cost of the Fintech startup’s screening technology, decrease with the performance of that technology, and increase with the cost of entrepreneurs’ conveying information to the Fintech startup. However, when the preparation cost of entrepreneurs applying to the banks for loans falls with Fintech, the bank screening incentives are eroded; while when the bank screening cost decreases with Fintech, those incentives are enhanced. We also discuss the role of capital regulation and several extensions for robustness.

Keywords: Fintech; Banks; Credit market competition; Screening incentives; Capital regulation (search for similar items in EconPapers)
JEL-codes: G18 G21 G23 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10693-021-00363-y

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