Fintech and commercial bank risks–The moderating effect of financial regulation

This study examines the relationship between financial technology (fintech) and commercial bank risk, using unbalanced panel data from 114 Chinese urban banks from 2014 to 2021. The findings reveal a complex and dynamic relationship. Overall, fintech has a mitigating effect on bank risk. However, the relationship follows an inverted U-shaped pattern, exacerbating risks in the early stages but reducing them as fintech develops. In particular, financial regulation plays a crucial role in moderating this relationship by counteracting the negative effects during the initial introduction of fintech.