Fintech adoption, internal control quality and bank risk taking: Evidence from Chinese listed banks

Whether and how financial technology (Fintech) affects banks' risk management has been a topical issue. This paper empirically examines the heterogeneous effect and transmission channels of banks' own fintech adoption on bank risk taking using unbalanced panel data for 36 listed banks in China from 2011 to 2021. The results show that banks' fintech adoption can effectively reduce banks' risk-taking, but this dampening effect is significant only among state-owned banks, small and medium-sized banks, and banks with a high share of non-interest income. Banks can reduce their risk-taking by improving the quality internal controls through fintech.