Research on the influence of FinTech development on credit supply of commercial banks: the case of China

Guo Wu, Jiadong Luo and Kejing Tao

Applied Economics, 2024, vol. 56, issue 6, 639-655

Abstract: This study investigates the impact of FinTech development on the credit supply of China’s commercial banks to individuals and enterprises. We first evaluate the development status and prospects of FinTech in China and construct theoretical influencing hypotheses. A ‘supply-side’ FinTech development index is constructed using principal component analysis. We employ panel data models and use financial data from 22 listed China’s commercial banks between the year 2013 and 2020 to empirically test the hypothesized relationships. Multiple approaches are used to deal with endogenous problems. We also estimate the impact in a difference-in-difference model specification. The results show that FinTech development effectively facilitates the expansion of bank credit and the relationship continues to hold after remedying endogeneity issues. We further find that the impact is heterogeneous across banks in terms of bank type and bank size, with the impact on state-owned commercial banks being the least significant and the impact on small banks being the most significant.

Date: 2024
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DOI: 10.1080/00036846.2023.2169243

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