IDEAS home Printed from https://ideas.repec.org/a/wly/ijfiec/v30y2025i1p221-241.html
   My bibliography  Save this article

FinTech innovation, stability and efficiency: Evidence from Malaysian bank industry

Author

Listed:
  • Rubi Ahmad
  • Changqian Xie
  • Panpan Wang
  • Biao Liu
  • Fauzi Zainir
  • Magda Ismail Abdel Mohsin

Abstract

The rapid development of digital finance is reshaping the business model of the traditional bank industry and bringing challenges to it as well. Based on an unbalanced panel of data constructed by 36 banks in Malaysia from 2006 to 2020, this study examines the impact of financial technology on banks' stability and efficiency. We find that, compared with Islamic banks, FinTech innovation significantly improves the stability of commercial banks. Additionally, it improves the entire sample banks' efficiency calculated by the data envelopment analysis‐Malmquist method, which can capture the efficiency changes from a dynamic perspective. These baseline results are affirmed by the generalized method of moment approach to mitigate potential endogeneity issues. Furthermore, the impacts of FinTech innovation on banks are heterogeneous. The high‐profit banks enjoy the benefits of improving their stability level from FinTech development. However, for the small‐sized and low‐profit banks, FinTech innovation contributes more to improving their efficiency. Our analysis provides empirical evidence for Malaysia and similar developing countries that are receptive to FinTech development but have relatively less advanced technology infrastructure. It can also shed light on the FinTech investment decisions of bank management.

Suggested Citation

  • Rubi Ahmad & Changqian Xie & Panpan Wang & Biao Liu & Fauzi Zainir & Magda Ismail Abdel Mohsin, 2025. "FinTech innovation, stability and efficiency: Evidence from Malaysian bank industry," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 221-241, January.
    • Handle: RePEc:wly:ijfiec:v:30:y:2025:i:1:p:221-241
    DOI: 10.1002/ijfe.2917
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/ijfe.2917
    Download Restriction: no
    File URL: https://libkey.io/10.1002/ijfe.2917?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:ijfiec:v:30:y:2025:i:1:p:221-241. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.interscience.wiley.com/jpages/1076-9307/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.