Fintech, financial development and banking efficiency: evidence from Chinese commercial banks

Yixuan Li, Charalampos Stasinakis, Wee Meng Yeo and Filipa Da Silva Fernandes

The European Journal of Finance, 2025, vol. 31, issue 10, 1245-1295

Abstract: We investigate the impact of Financial Technology (Fintech) on the banking efficiency in China considering the impact of financial development differences in the country. Using a panel of Chinese Commercial Banks (CBs) during 2011–2020, we apply a two-stage empirical framework, combining Data Envelopment Analysis (DEA) – Malmquist and double bootstrapped truncated regressions for more robust estimates. Our first-stage results show that there is variation in efficiency changes among different types of CBs. In the second stage, our findings suggest a positive relationship between Fintech development and the efficiency of Chinese CBs, while City CBs (CCBs) are more positively affected. CCBs’ efficiency appears more sensitive to Fintech development, while technology innovation largely improves the efficiency of small-size CBs. Finally, the regional financial development does play a role in the positive impact of Fintech. Our results remain robust under several robustness checks accounting for different Fintech dimensions, non-linear effects and potential endogeneity issues.

Date: 2025
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DOI: 10.1080/1351847X.2025.2468481

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