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Understanding China’s fintech sector: development, impacts and risks

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  • Xiuping Hua
  • Yiping Huang

Abstract

Financial technology (fintech) is rapidly transforming the economy as well as the financial landscape in China. This paper attempts to shed light on its contributing factors, current state, economic impacts and potential risks. We identify three key drivers for China’s fintech development, namely shortage of supply in formal financial market, strong government support for promoting financial inclusion through digital technology, and more ‘tolerant’ regulatory environment. The greatest value of the Chinese fintech sector is promotion of financial inclusion, enabling a vast number of small- and medium-sized enterprises (SMEs) and low-income households to access to financial services. Existing studies unveil some strong evidences of fintech development improving efficiency, increasing employment and supporting entrepreneurship. In the meantime, there are also serious challenges facing this sector, such as regulatory uncertainties, illegal transactions, data abuse, etc. We conclude the paper by presenting some key takeaways, including several lessons for financial regulation.

Suggested Citation

  • Xiuping Hua & Yiping Huang, 2021. "Understanding China’s fintech sector: development, impacts and risks," The European Journal of Finance, Taylor & Francis Journals, vol. 27(4-5), pages 321-333, March.
    • Handle: RePEc:taf:eurjfi:v:27:y:2021:i:4-5:p:321-333
    DOI: 10.1080/1351847X.2020.1811131
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    Citations

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    Cited by:

    1. Guo, Xiaoxin & Zhong, Shihu, 2023. "Unintended consequences: How does digital inclusive finance affect migrants' urban settlement intentions?," International Review of Financial Analysis, Elsevier, vol. 89(C).
    2. Guo, Pin & Zhang, Cheng, 2023. "The impact of bank FinTech on liquidity creation: Evidence from China," Research in International Business and Finance, Elsevier, vol. 64(C).
    3. Martin Chorzempa & Yiping Huang, 2022. "Chinese Fintech Innovation and Regulation," Asian Economic Policy Review, Japan Center for Economic Research, vol. 17(2), pages 274-292, July.
    4. Wang, Xinyue & Cao, Yuqiang & Feng, Zhuoan & Lu, Meiting & Shan, Yaowen, 2023. "Local FinTech development and stock price crash risk," Finance Research Letters, Elsevier, vol. 53(C).
    5. Liao, Kezhi & Ma, Chengcheng & Zhang, Jingxue & Wang, Zhihao, 2024. "Does big data infrastructure development facilitate bank fintech innovation? Evidence from China," Finance Research Letters, Elsevier, vol. 65(C).
    6. Li, Rongda & He, Jing, 2024. "FinTech development and household resilience to negative income shocks: The role of informal risk sharing," International Review of Economics & Finance, Elsevier, vol. 94(C).
    7. Wang, Yichen & Hu, Jun & Chen, Jia, 2023. "Does Fintech facilitate cross-border M&As? Evidence from Chinese A-share listed firms," International Review of Financial Analysis, Elsevier, vol. 85(C).
    8. Li, Xiaofan & Ye, Yongwei & Liu, Zhaoda & Tao, Yunqing & Jiang, Jingjing, 2024. "FinTech and SME’ performance: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 670-682.

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