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Fintech development, firm digitalization, and bank loan pricing

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  • Chen, Wen
  • Wu, Weili
  • Zhang, Tonghui

Abstract

Using loan-level data of Chinese listed companies from 2011 to 2018, this paper finds a significant decrease in bank loan prices due to the regional development level of financial technology (fintech). For small and medium-size regional commercial bank lenders, a 1% increase in the regional fintech development level can reduce the spread of bank loans for local firms by 1.13 basis points. The reduction effect is greater for enterprises with more binding financial constraints and those headquartered in regions with a lower level of banking competition. In addition, this study discusses the policy effect of firm digitalization. The results show that firm digitalization can reduce bank loan prices directly while weakening the policy effect of fintech in reducing loan prices indirectly. To promote the coordination between fintech development and firm digitalization in reducing corporate financing cost, fintech enterprises should take the role of helpers of commercial banks rather than competitors.

Suggested Citation

  • Chen, Wen & Wu, Weili & Zhang, Tonghui, 2023. "Fintech development, firm digitalization, and bank loan pricing," Journal of Behavioral and Experimental Finance, Elsevier, vol. 39(C).
    • Handle: RePEc:eee:beexfi:v:39:y:2023:i:c:s2214635023000527
    DOI: 10.1016/j.jbef.2023.100838
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    Cited by:

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    2. Zhu, Yi & Lin, Yangyi & Tan, Yanyu & Liu, Bin & Wang, Hao, 2024. "The potential nexus between fintech and energy consumption: A new perspective on natural resource consumption," Resources Policy, Elsevier, vol. 89(C).
    3. Yao, Yanzhen & Wei, Lu & Jing, Haozhe & Chen, Meiqi & Li, Zhan, 2024. "The impact of readability of risk disclosures in bond prospectuses on credit risk premium," Research in International Business and Finance, Elsevier, vol. 70(PA).

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    More about this item

    Keywords

    Fintech; Commercial bank; Loan pricing; Digitalization;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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