The dark side of the moon? Fintech and financial stability

Serhan Cevik

International Review of Economics, 2024, vol. 71, issue 2, No 13, 433 pages

Abstract: Abstract Rapid advances in digital technology are revolutionizing the financial landscape. The rise of fintech has the potential to make financial systems more efficient and competitive and broaden financial inclusion. With greater technological complexity, however, fintech also poses potential systemic risks. In this paper, I use a novel dataset to trace the development of fintech (excluding cryptocurrencies) and empirically assess its impact on financial stability in a panel of 198 countries over the period 2012–2020. The analysis provides interesting insights into how fintech correlates with financial stability: (1) the impact magnitude and statistical significance of fintech depend on the type of instrument (digital lending vs. digital capital raising); (2) the overall effect of all fintech instruments together turns out to be negative because of the overwhelming share of digital lending in total, albeit statistically insignificant; and (3) while digital capital raising is estimated to have a positive effect on financial stability in advanced economies, its effect is negative in developing countries. Fintech is still small compared to traditional institutions, but rapidly expanding in riskier segments of the financial sector and creating new challenges for policymakers.

Keywords: Fintech; Financial innovation; Financial stability (search for similar items in EconPapers)
JEL-codes: D82 D83 E44 G14 G15 G21 G28 G38 O33 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s12232-024-00449-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: The Dark Side of the Moon? Fintech and Financial Stability (2023)
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:spr:inrvec:v:71:y:2024:i:2:d:10.1007_s12232-024-00449-8

Ordering information: This journal article can be ordered from
http://www.springer. ... cy/journal/12232/PS2

DOI: 10.1007/s12232-024-00449-8

Access Statistics for this article

International Review of Economics is currently edited by Luigino Bruni

More articles in International Review of Economics from Springer, Happiness Economics and Interpersonal Relations (HEIRS)
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().