FinTech as a Financial Liberator

Greg Buchak, Jiayin Hu and Shang-Jin Wei

No 29448, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A binding interest rate cap on household savings is a common form of financial repression in developing economies and typically benefits banks. Using proprietary data from a leading Chinese FinTech company, we study Fintech's role in ending financial repression in China through the introduction of a money market fund with deposit-like features available through an already widely-adopted household payment platform. Cities and banks whose depositor base is more exposed to FinTech see greater deposit outflows. Importantly, exposed banks respond to FinTech competition by offering competing products with market interest rates. FinTech thus facilitates a bottom-up interest rate liberalization.

JEL-codes: E21 E42 E43 E44 E52 E58 G21 G28 G51 (search for similar items in EconPapers)
Date: 2021-11
New Economics Papers: this item is included in nep-ban, nep-cna, nep-cwa, nep-fdg, nep-mac and nep-pay
Note: AP DEV IFM
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