Effects of fintech on financial stability by studying GCC banks

Abstract

There is controversy over whether FinTech causes financial institutions to become fragile. We exploit the introduction of FinTech regulatory sandboxes as an exogenous shock and investigate the heterogeneous effects of FinTech on the fragility of financial institutions using a panel sample of listed banks from GCC countries. Our results will show that if a shock to FinTech innovations does or doesn’t significantly impact bank fragility. Secondly, we will conclude if promoting FinTech reduces or increases financial institution fragility in emerging (developed) financial markets. Finally, we will discover FinTech’s influences on bank fragility via profitability