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| How does FinTech Development Affect Traditional Banking in China? The Perspective of Online Wealth Management Products |
| QIU Han, HUANG Yiping, JI Yang
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National School of Development/Institute of Digital Finance,Peking University;
Department of Finance,School of Economics, Xiamen University |
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Abstract This paper uses the annual report data of 263 banks from 2011 to 2015 and the city-level Digital-financial inclusion index constructed by Institute of Digital Finance to explore the impact of the Fintech development on bank behavior. The study finds that the Fintech development actually promotes the interest rate liberalization at the depository side, changes the bank's debt structure, reduces the proportion of banks' retail deposits, and increases the proportion of wholesale financing such as interbank liabilities. Change of liabilities structure leads to a rise in the bank asset risky, but both the average interest rate of assets and net interest margin decline. It suggests that banks choose to use higher-risk assets to make up for the losses caused by rising costs on the liability side rather than transferring costs to downstream companies. At the same time, this paper also finds that larger banks are less affected by the Fintech development.
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Received: 01 September 2018
Published: 21 December 2018
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