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

Abstract

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.

The Effect of the Covid-19 Pandemic on the Financial Performance of Commercial Banks in Ghana

“…Government and policymakers have tried various policy interventions to help reduce the impact of the pandemic on their economies (Sang, 2022). Researchers have examined how the policy interventions in various countries affected the economic recovery and growth of the various economies (Yan & Jia, 2022;Katusiime, 2021). For instance, Feyen, Gispert, Kliatskova, and Mare (2021) examine the factors that influence policymakers' responsiveness and activity in emerging markets and developing economies.…”

“…The covid-19 pandemic even though affected almost all countries, did not have the same impact on the economies of these countries due to differences in the severity of the pandemic, government response and the level of resilient of the countries (Katusiime, 2021;Yan & Jia, 2022;Nguyen, 2022). For instance, the pandemic was not as severe in Africa as it was in Europe, America, Asia and the Middle East (Katusiime, 2021).…”

“…However, the disruption of the global supply chain and transportation network meant that all countries that are involved in international trade will be severely affected and Ghana is not an exception. The pandemic resulted in a slowdown in many economies whiles others even went into recession (Yan & Jia, 2022). Ghana's economic growth had reduced from 6.5% in 2019 to 0.51% in 2020 as a result of the covid-19 pandemic.…”

“…Several studies have examined the impact of the pandemic on the banking sector in many parts of the world and produced mixed results (Demirgüç-Kunt et al, 2021;Katusiime, 2021). For instance, Yan and Jia (2022) found that the covid-19 pandemic threatened the sustainability of the banking sector in China but had a positive effect on the development of fintech. Katusiime (2021) in a related study in Uganda found evidence to the effect that the covid-19 pandemic has a negative effect on bank profitability in the long run.…”

The impact of the COVID-19 pandemic outbreak on the sustainable development of the Turkish banking sector

“…Literature review. These findings show that the trade-off hypothesis between financial development and ecological assets is validYan andJia (2022) 2022 Aims to analyze the impact of COVID-19 on the sustainability of the banking sector and the fintech sector COVID-19 infection rate increased, and the number of bank branches has decreased significantly, which threatens the sustainability of the banking sector. The fintech sector acts as a competitor to the banking sector.…”