Does bank FinTech reduce credit risk? Evidence from China

Using data from Chinese commercial banks between 2008 and 2017, this paper explores the effects of bank FinTech on credit risk. We first construct and measure a bank FinTech index using web crawler technology and word frequency analysis. The results show that the development of bank FinTech is faster in state-owned banks than in other banks. Moreover, among the five subareas of bank FinTech, the development of internet technology is ahead of artificial intelligence technology, blockchain technology, cloud computing technology, and big data technology. Then, the impacts of bank FinTech on credit risk are examined. We find that bank FinTech significantly reduces credit risk in Chinese commercial banks, and further analyses show that the negative effects of bank FinTech on credit risk are relatively weak among large banks, state-owned banks, and listed banks.