Fintech-based financial inclusion and bank risk-taking: Evidence from OIC countries
Document Type
Article
Publication Date
11-1-2021
Abstract
Financial inclusion has gone beyond the rhetoric surrounding social development and financial stability, but also expanding into pathos of arbitrage benefits made from cheap retail deposits by large banks and banks from technologically developed regions. This study investigates whether a higher degree of fintech-based financial inclusion (FFI) intensifies banks' risk-taking by analysing data from 534 banks from 24 OIC countries. The results indicate that higher degree of FFI controls bank's risk-taking behaviour. The nexus turns stronger in the post-industrial revolution 4.0 (IR4.0) era. Our results are robust across multiple proxies and estimation methods. We discuss how competition surrounding investing in fintech may expose the banks towards severe uncertainty.
Keywords
Banks' risk-taking, Z-score, Fintech, Financial inclusion, Financial stability
Funders
None
Publication Title
Journal of International Financial Markets Institutions & Money
Volume
75
Publisher
Elsevier
Publisher Location
RADARWEG 29, 1043 NX AMSTERDAM, NETHERLANDS