20240125-IMF-Does_FinTech_Increase_Bank_Risk_Taking_46页_680kb

FinTech activities demonstrate a significant association with heightened risk-taking among financial institutions, supporting the competition-fragility hypothesis. This holds true across various business models, particularly affecting commercial banks through balance sheet lending. The link between FinTech and risk-taking is moderated by institutional quality, capitalization ratios, and regulatory frameworks. Countries with stronger institutions and policies experience less risk-taking despite growing FinTech presence, reconciling conflicting literature on competition's net effect. These findings underscore the importance of robust institutions and regulatory measures in leveraging FinTech's benefits without compromising financial stability.