The Nonlinear Impact of Fintech on Credit Risk in Chinese Commercial Banks

Abstract

Manuscript type: Research paper
Research aims: This study investigates how Fintech development affects
the credit risk of Chinese commercial banks and whether this effect
follows a stage-dependent nonlinear pattern.
Design/Methodology/Approach: Using panel data for 94 Chinese
commercial banks from 2011 to 2021, this study applies fixed-effects
models, alternative Fintech-related indicators, heterogeneity tests, and
system GMM estimation.
Research findings: This study finds a significant inverted U-shaped
relationship between Fintech and banks’ non-performing loan ratios. The
estimated turning point of 88.21 lies within the observed sample range,
indicating a meaningful stage transition in bank digital transformation.
The nonlinear effect is more evident among non-eastern and non-stateowned
banks.
Theoretical contribution/Originality: These findings contribute to the
literature by linking Fintech, credit risk, turning-point interpretation, and
institutional heterogeneity.
Practitioner/Policy implication: The findings offer practical implications
for bank managers, investors, and regulators.
Research limitation: The sample period is limited to 2011–2021.