The impact of Fintech lending on Commercial banks and Rural Banks

Rakotoarisoa Maminiaina Heritiana Sedera

Abstract


Financial technology has shaped the financial industry specifically the online borrowings and lending platform. This study aims to examine the impact of Fintech lending on the banks’ performance. To conduct our study, secondary data of peer-to-peer lending and banks  were collected  from  the Financial  Services Authority of Indonesia (OJK), consisting of 115 Fintech lending, 1554 rural banks, and 113 commercial banks. Regression Analysis was employed to elaborate on the relationship between variables. The analysis indicates a strong relationship between Fintech lending and rural banks but with a moderate relationship compared to commercial banks. It can be concluded that the penetration of Fintech lending correlates with banks’ performance. This study also helps Banks to understand the threat and the opportunity in the market, to find new strategies to be more competitive in the lending market such as application of technology in its service or corporation with Fintech companies.


Keywords


Fintech lending; bank performance; commercial bank; rural bank

Full Text:

PDF
rticle

References


Anagnostopoulos I, 2018, FinTech and Regtech: Impact on Regulators and Banks, Journal of Economics and Business, https://doi.org/10.1016/j.jeconbus.201

07.003

Andreas Mild, MartinWaitz, Jürgen Wöck, 2015, “How low can you go? — Overcoming the inability of lenders to set proper interest rates on unsecured peer-to-peer lending markets”, Journal of Business Research 68 (2015) 1291–

, http://dx.doi.org/10.1016/j.jbusres.2014.11.021

Andrew Sutherland, Does Credit Reporting Lead to a Decline in Relationship Lending? Evidence from Information Sharing Technology, Journal of Accounting and Economics (2018), DOI: 10.1016/j.jacceco.2018.03.002

Anjan V. Thakor, 2019, “FinTech and banking: What do we know?”, Journal of Financial Intermediation, https://doi.org/10.1016/j.jfi.2019.100

Berentseen, A., Schar, F., 2018. The Case for Central Bank Electronic Money and the Non-Case for Central Bank Cryptocurrencies 100 Federal Reserve Bank of St. Louis. https://research.stlouisfed.org/publicat ions/review/2018/02/13

B-j. Ma, Z-l. Zhou, F-y. Hu, Pricing Mechanisms in the Online Peer-to- Peer Lending Market, Electronic Commerce Research and Applications (2017), doi: https://doi.org/10.1016/j.elerap.2017. 10.006

De Roure, C., Pelizzon, L., & Tasca, P. (2017). How Does P2P Lending Fit Business and Finance

(2019),https://doi.org/10.1016/j.ribaf.2019.01.012

Fabian Prystav, 2015, “Personal information in peer-to-peer loan applications: Is less more?, Journal of Behavioral and Experimental Finance 9 (2016) 6–19, http://dx.doi.org/10.1016/j.jbef.2015.11.005

FinTech: The Impact on Consumers and Regulatory Responses”, Journal of Economics and Business 100 (2018) 1–6, https://doi.org/10.1016/j.jeconbus.2018.11.002

Foley, S., Karlsen, J., Putninš, T., 2019, “Sex, Drugs, and Bitcoin: how much illegal activity is financed through cryptocurrencies?” Rev. Financ. Stud. 32 (5), 1798-1853.Available at https://doi.org/10.1093/rfs/hhz015

Greg Buchak, Gregor Matvos, Tomasz Piskorski, Amit Seru., 2018, “FinTech, regulatory arbitrage, and the rise of shadow banks”, Journal of Financial Economics 130 (2018) 453–483, https://doi.org/10.1016/j.jfineco.2018.03.01 1

Hyun-Sun Ryu, 2018 "What makes users willing or hesitant to use FinTech?: The moderating effect of user type", Industrial Management

& Data Systems, https://doi.org/10.1108/IMDS-07-2017- 0325

Inna Romānova and Marina Kudinska, 2017, “banking and FinTech: a challenge or opportunity”, Contemporary Issues in Finance: Current Challenges from Across Europe, Contemporary Studies in Economic and Financial Analysis, Volume 98, 21_35, ISSN: 1569-3759/doi:10.1108/S1569-

In Lee, Yong Jae Shin, 2018, “FinTech: Ecosystem, business models, investment https://doi.org/10.2139/ssrn.2756191

Dos Santos Brian, Fichman Robert, Zheng Zhiqiang, 2014, “Digital Innovation as a Fundamental and Powerful Concept in the Information Systems Curriculum”, MIS Quarterly, volume http://dx.doi.org/10.1016/j.bushor.2017.09.

Jagtiani, Julapa, & Lemieux, Catharine. 2018, Do FinTech Lenders Penetrate Areas That Are Underserved by Traditional Banks?. Journal of Economics and Business Dranev, Y., Frolova, K., Ochirova, E., The Impact of FinTech M&A on Stock Returns, Research in International

Jiaqi Yan, Wayne Yu, and J. Leon Zhao, 2015, “How signaling and search costs affect information asymmetry in P2P lending: the economics of big data”, Financial Innovation (2015) 1:19, DOI 10.1186/s40854-015-0018-1

Joseph F hair Jr. William C. Black Barry J. BabinRolph E. Anderson, Multivariate Data Analysis, Pearson new International Edition, Seventh Edition,

Lucia Gibilaro, Gianluca Mattarocci, (2018) "Peer-to-peer lending and real estate mortgages: evidence from the United Kingdom", Journal of European Real Estate Research, Vol. 11 Issue: 3, pp.319-334, https://doi.org/10.1108/JERER-12-

-0048

Ma, B. Jiang, Zhou, Z. long, & Hu, F. Ying. (2017). Pricing mechanisms in the online Peer-to-Peer lending market. Electronic Commerce Research and Applications, 26(October), 119–130. https://doi.org/10.1016/j.elerap.2017.1

006

Mei Xue, Lorin M. Hitt, Pei-yu Chen, (2011) Determinants and Outcomes of InternetBanking Adoption.

Management Science 57(2):291-307. http://dx.doi.org/10.1287/mnsc.1100.

Mitchell A. Petersen Raghuram G. Rajan, 2002, “Does Distance Still Matter? The Information Revolution in Small Business Lending”, the journal of Finance, volume 54-issue 6, https://doi.org/10.1111/1540-

00505

Meyer, T. Power of people: online P2P lending nibbles at banks’ loan business. E-Banking Snapshot, 22, Deutsche Bank Research, Frankfurt, Germany, July 2007.

Ozili, P. K. (2018). Impact of digital finance on financial inclusion and stability. Borsa Istanbul Review, 18(4), 329–

https://doi.org/10.1016/j.bir.2017.12.0

Phan, D. H. B., Narayan, P. K., Rahman, R. E., & Hutabarat, A. R. (2019). Do financial technology firms influence bank performance? Pacific-Basin Finance Journal, (September), 101210. https://doi.org/10.1016/j.pacfin.2019.1

Philippon, Thomas. The Fintech Opportunity (August 2016). NBER Working Paper No. w22476. Available at SSRN: https://ssrn.com/abstract=2819862

Ryu, H. (2017). Industrial Management & Data Systems Article information : What makes users willing or hesitant to use Fintech ? : The moderating ef effect of user type. Industrial Management & Data Systems,

(3), 541–569.

Serge Ky, Clovis Rugemintwari, and Alain Sauviat, 2019, “Is FinTech good for bank performance? The case of mobile money in the East African Community”, https://www.researchgate.net/publication/3

Sujeet Kumar Sharma Srikrishna Madhumohan Govindaluri, (2014), "Internet banking adoption in India", Journal of Indian Business Research, Vol. 6 Iss 2 pp. 155 –

, http://dx.doi.org/10.1108/JIBR-02-

-0013

Tao Yu, Wei Shen, 2019, “Funds sharing regulation in the context of the sharing economy: Understanding the logic of China’s P2P lending regulation”, computer law & security review 35 (2019) 42–58, https://doi.org/10.1016/j.clsr.2018.10.001

Thorsten Beck, Tao Chen, Chen Lin, Frank M.

Song, 2016, “Financial innovation: The

bright and the dark sides”, Journal of Banking and Finance 72 (2016) 28–51, http://dx.doi.org/10.1016/j.jbankfin.2016.0

012

Thakor, A. V. (2019). Fintech and banking: What do we know? Journal of Financial Intermediation, (July). https://doi.org/10.1016/j.jfi.2019.100833

Wimboh Santoso, Irwan Trinugroho & Tastaftiyan Risfandy (2019): What Determine Loan Rate and Default Status in Financial Technology Online Direct Lending? Evidence from Indonesia, Emerging Markets Finance and Trade, https://doi.org/10.1080/1540496X.2019.16

Yuejin Zhang, Haifeng Li, Mo Hai, Jiaxuan Li, Aihua L, 2017, Determinants of loan funded successfully in online P2P Lending, Information Technology and Quantitative Management (ITQM 2017), Procedia Computer Science 122 (2017) 896–901

Zhengchi Liu, Jennifer Shang, Shin-Yi Wu, Pei- yu Chen, 2019 “Social collateral, soft information, and online peer-to-peer lending: A theoretical model”, European

Journal of Operational Research (September 2019), https://doi.org/10.1016/j.ejor.2019.08

.038

Otoritas Jasa Keuangan - https://www.ojk.go.id/id/Default.aspx


Refbacks

  • There are currently no refbacks.