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Your next bank is not necessarily a bank: FinTech expansion and bank branch closures

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  • Yuan, Kaibin
  • Li, Wanli
  • Zhang, Weijun

Abstract

This paper presents novel evidence on the effect of FinTech expansion on bank branch closures by exploiting plausibly exogenous variation in FinTech expansion generated by the largest FinTech giant in China. We find that FinTech expansion leads to a rise in both the number and share of branch closures. The debranching effects are significant only for those product ranges overlapped between the bank and FinTech company, implying that the bank’s presumably advantageous products can, in fact, be replaced by new rivals from FinTech. Our findings provide a window to understand how the global debranching trend occurs.

Suggested Citation

  • Yuan, Kaibin & Li, Wanli & Zhang, Weijun, 2023. "Your next bank is not necessarily a bank: FinTech expansion and bank branch closures," Economics Letters, Elsevier, vol. 222(C).
    • Handle: RePEc:eee:ecolet:v:222:y:2023:i:c:s0165176522004220
    DOI: 10.1016/j.econlet.2022.110948
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    References listed on IDEAS

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    Cited by:

    1. Mohammad Ali Yousef Yamin & Omima Abdalla Abass Abdalatif, 2024. "Examining consumer behavior towards adoption of quick response code mobile payment systems: transforming mobile payment in the fintech industry," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-11, December.

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    More about this item

    Keywords

    FinTech; Bank branch closures; Banking desert; Financial development;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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