Impact Mechanism and Moderating Effects of Fintech Innovation on Bank Risk-Taking Behavior

Purpose: This study examines impact mechanisms and moderating roles of fintech innovation in influencing bank risk-taking behavior while filling significant gaps in literature on how technology adoption affects banking risk patterns under different contextual conditions. Methodology: We utilize panel data regression analysis on 180 Chinese commercial banks from 2015 to 2023 while forming complete fintech innovation indices from principal component analysis and analyzing various risk aspects including credit risk, operational risk, and multi-index risk measures. We include interactive terms in our empirical structure for testing moderating roles of regulatory stringency, digital transformation maturity, and macroeconomic uncertainty. Findings: Technological innovation considerably lowers exposure to credit risk with non-performing loan levels dropping by 0.127 percentage points for every technological adoption unit. However, these roles turn out to be considerably moderated by contextual conditions: risk-mitigating role of fintech innovation gets strengthened under stricter controls, digital maturity induces complementarity impacts in favor of advanced adopter groups while ultimately lessening fintech effectiveness by around 45% under crisis conditions. Conclusion: The fintech-bank risk nexus is conditionally complex with different sets of contextual conditions determining whether technological innovations inflate or erode banking sector resilience. Practical Implications: Financial institutions need to implement sequential digital transformation policies along with their stringency of controls with respect to institutions' capabilities while policymakers need to formulate adaptive regulating conditions that note conditional fintech-risk relationships while encouraging responsible innovation trajectories.