By integrating bank-level data for 2013–22 with time-varying data on fintech, the impact of monetary policy changes on bank lending is analysed. The findings indicate that fintech impedes bank lending in the presence of a monetary contraction. This impact is driven through non-priority lending, mainly by public banks.

The views expressed in the article are personal.

One aspect of technology that has irreversibly and irretrievably changed the way financial tran­sactions are conducted is financial technology (fintech for short). Simply defined, fintech is technologically enabled financial innovations that could result in new business models, applications, processes, and products with associated material effects on financial markets, financial institutions, and the provision of financial services (FSB 2017). Investments in the fintech domain have been phenomenal—increasing from less than $20 billion in 2013 to $210 billion in 2022 according to Statista—affecting both the demand and supply sides of finance, including retail and wholesale transactions, insurance, credit provision, and capital raising. In turn, this has raised the possibility of affecting the banking sector, particularly its lending behaviour.

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QOSHE - Fintech and the Efficacy of Monetary Transmission - Saibal Ghosh
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Fintech and the Efficacy of Monetary Transmission

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12.04.2024

By integrating bank-level data for 2013–22 with time-varying data on fintech, the impact of monetary policy changes on bank lending is analysed. The findings indicate that fintech impedes bank lending in the presence of a monetary contraction. This impact is driven through non-priority lending, mainly by public banks.

The views expressed in the article are........

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