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Assessing the Role of the Fintech Era on the Banking Stability of an Emerging Economy: Interaction Analysis of the Indian Banking Industry

Author

Listed:
  • Syed Aamir Aijaz

    (Institute of Management, Commerce and Economics, Shri Ramswaroop Memorial University, Lucknow, India)

  • Grima Simon

    (University of Malta, Malta, Faculty of Economics Management and Accountancy, And the University of Latvia, Riga, Latvia. Faculty of Business, Management and Economics)

  • Sood Kiran

    (Chitkara Business School, Chitkara University, Rajpura 140401, Punjab, India Research Fellow, Women Researchers Council (WRC), Azerbaijan State University of Economics (UNEC))

Abstract

Research background The rapid expansion in recent fintech innovations has garnered researchers’ attention to evaluate its influence on the banking industry. Purpose In this quest, the current study conducts an interaction analysis to measure the impact of the fintech era on Indian banking stability. Research methodology S imilarly t o p revious s tudies, w e u se a regression analysis and a Pearson correlation on the transition period of the fintech era to measure the impact of explanatory variables on the outcome variables of the Indian banking industry. Furthermore, as a robustness test, we have also used the Generalised Method of Moments system approach. This enabled us to make comparisons with similar studies. Results Using annual data from 1995 to 2021, the study reveals that, compared to the first fintech era, the second era assisted in reducing NPLs and enhancing financial stability in India. The study concludes that during the second wave of the fintech revolution, through interaction analysis, explanatory variables positively influence banking stability and NPLs. Novelty The current study contributes toward understanding the significance of fintech development from the context of an emerging country. It also helps to interpret the importance of disruptive forces of fintech development in the banking industry.

Suggested Citation

  • Syed Aamir Aijaz & Grima Simon & Sood Kiran, 2024. "Assessing the Role of the Fintech Era on the Banking Stability of an Emerging Economy: Interaction Analysis of the Indian Banking Industry," Folia Oeconomica Stetinensia, Sciendo, vol. 24(1), pages 182-202.
    • Handle: RePEc:vrs:foeste:v:24:y:2024:i:1:p:182-202:n:1011
    DOI: 10.2478/foli-2024-0011
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    References listed on IDEAS

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    More about this item

    Keywords

    fintech innovations; non-performing loans; banking stability; corruption; interaction analysis; fintech first wave; fintech era;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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