Does cyber tech spending matter for bank stability?

Uddin, Hamid; Mollah, Sabur; Ali, Hakim

doi:10.1016/j.irfa.2020.101587

Cited by 29 publications

(13 citation statements)

References 77 publications

(100 reference statements)

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“…First, it relates to the few existing studies on the FinTech industry. These studies investigate the post crisis change in the pattern of FinTech VC investments (Cumming and Schwienbacher, 2016), the impact of FinTech lending on firm growth and customer satisfaction (Schweitzer and Barkley, 2017), the characteristics of loans originated from FinTech lenders relatively to non-FinTech lenders (Jagtiani and Lemieux, 2017;Buchak et al, 2017), the determinants of the Bitcoin exchange rate (Makrichoriti and Moratis, 2016), risk spillovers between FinTech and traditional financial institutions (Li et al, 2020), the impact of disruptive digital transformation, like cyber tech spending, on bank stability (Uddin et al, 2020) and the effect of FinTech on the economic capital of the market risk of commercial banks (Yao and Song, 2021). Second, it relates to the literature on capital structure and performance.…”

Section: Introductionmentioning

confidence: 99%

Financial leverage and performance: the case of financial technology firms

2021

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Over the past years, the financial technology industry has gained considerable attention from policy makers and regulators, market participants, as well as the general public. Despite the interest of these stakeholders, academic research on the topic is scarce and we aim to extend the literature by examining the impact of financial leverage on the performance of FinTech firms. Using a sample of 146 U.S. FinTech firms operating in ten market segments over the period 2000-2016, we find that financial leverage has a negative impact on profitability and risk-adjusted performance. We also reveal that the magnitude of the influence of leverage depends on firm age. The results are robust to the use of a cross-country sample, alternative model specifications and estimation approaches.

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Section: Introductionmentioning

confidence: 99%

Financial leverage and performance: the case of financial technology firms

2021

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“…However, the use of digitalization has led to greater financial inclusion and expands banks' business that impact on financial stability (Ozili, 2018;Banna and Alam, 2021;Pierri and Timmer, 2022). Uddin et al (2020) find that better allocation in CyberTech expenditures increases banks' stability. Moreover, Banna and Alam (2021) and Ozili (2018) document that greater digital financial inclusion reduces bank risk.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

“…In a recent paper, Sodokin et al (2022) highlight the relationship between digital implementation and bank stability in Sub-Saharan Africa. Uddin et al (2020) focus on examining the relationship between CyberTech expenditures and bank stability globally in 43 countries. Pierri and Timmer (2022) examine the essentials of technology implementation during the financial crisis in the banking sector in the USA.…”

Section: Introductionmentioning

confidence: 99%

Enhancing bank stability from diversification and digitalization perspective in ASEAN

Lestari

Jun

2023

SEF

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Purpose The financial sector's resilience is associated with greater prosperity and a better average income. Banks have evolved their business model and diversified their sources of income, and bank digitalization has become one of the prominent strategies. The purpose of this study is to examine how bank service expansion represented by revenue diversification activities and digital strategy will enhance bank stability in ASEAN countries from 2010 to 2021. Design/methodology/approach This study uses information from the Datastream database and banks’ annual reports to measure bank stability, diversification and market power, which also provide information for bank digital strategy. This study uses the two-step system generalized method of moments to investigate the effect of diversification and digitalization on bank stability in ASEAN. Findings The results of this study show that bank revenue diversification has no effect on bank stability, and the presence of the chief digital officer and digital disclosure improves banks’ stability. However, alliance strategy with financial technology companies does not significantly impact bank stability and might increase bank risk. Practical implications The findings of this study provide relevant policy implications: the regulation should support bank business to diversify the source of income; regulators and policymakers should regulate and enhance the Information and Communication Technology infrastructure; and banks should design their strategy comprehensively. Originality/value This study provides new evidence of the essential role of digital strategy in enhancing bank stability in ASEAN. In addition, this study also shows how banks diversify their business in a competitive environment.

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“…This negative impact not only reduces bank performance [37] but also changes the traditional business model of banks. Banks have to invest in fintech to improve their performance as the demand for IT by companies and individuals increases [38,39], which occupies their internal resources and makes them invest less in their branches. This impact is more evident during the COVID-19 outbreak.…”

Section: Mediation Effect Of the Fintech Sectormentioning

confidence: 99%

The Impact of COVID-19 on Bank Sector Traditional Business Model Sustainability in China: Bank Branch Versus Fintech

Yan

Jia

2022

Front. Phys.

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This paper aims to analyze the impact of COVID-19 on the sustainability of the banking sector and the fintech sector. In China, where banks’ revenue mainly comes from branches, we collect relevant data manually and use the OLS model for empirical analysis. The results show that as the COVID-19 infection rate increases, the number of bank branches decreases significantly, which threatens the banking sector’s sustainability. The fintech sector acts as a competitor to the banking sector. With the increase of COVID-19 infection rate, the public pays more attention to fintech, promoting the development of the fintech sector. Moreover, the impact of COVID-19 on these two sectors will diminish over time. In addition, this paper finds that COVID-19 further weakens the number of bank branches during the epidemic through the mediating effect of fintech. The findings of this paper help to assess the sustainability of the different financial sectors during the epidemic, which is essential for financial stability.

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Does cyber tech spending matter for bank stability?

Cited by 29 publications

References 77 publications

Financial leverage and performance: the case of financial technology firms

Financial leverage and performance: the case of financial technology firms

Enhancing bank stability from diversification and digitalization perspective in ASEAN

The Impact of COVID-19 on Bank Sector Traditional Business Model Sustainability in China: Bank Branch Versus Fintech

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