Developing countries are taking advantage of FinTech tools to provide more people with convenient access to financial market investment through digital wealth management. Using COVID-19 as an uncertainty shock, we examine whether and how digital wealth management affects the resilience of consumption to shocks based on a unique micro dataset provided by a leading Big Tech platform, Alipay in China. We find that digital wealth management mitigates the response of consumption to uncertainty shocks: residents who participate in digital wealth management, especially in risky asset investments, have a lower reduction in consumption. Importantly, digital wealth management helps improve financial inclusion, with a more pronounced mitigation effect among residents with lower-level wealth, living in less developed areas, and those with lower-level conventional finance accessibility. The mitigation effect works through the wealth channel: those who allocate a larger proportion of risky assets in their portfolio and obtain a higher realized return show more resilience of consumption to negative shocks. We also find that digital wealth management substitutes for conventional bank credit but serves as a complement to FinTech credit in smoothing consumption during uncertainty shocks. Digital wealth management provides a crucial way to improve financial inclusion and the resilience of consumption to shocks.

With fintech growth and smartphone adoption, e-wallets, which enable instant transactions while offering cash management products with financial returns, have become increasingly prevalent. Using a unique dataset from Alipay, the world’s largest e-wallet provider, we find that holdings in Yu’EBao—an investment product usable for payments—are less affected by interest rate changes than similar assets without payment functions. This effect is stronger for users who depend on Yu’EBao for daily spending, during peak payment periods, or among less experienced investors. Our findings show that Yu’EBao reduces retail fund flow to riskier assets by 7.7% for every one-percentage-point interest rate cut, dampening monetary policy transmission through the portfolio rebalancing channel.

Using unique account-level data from a leading Chinese fintech platform, we investigate how financial influencers, the key information intermediaries in social finance, attract followers through a process of social transmission bias. We document a robust performance-following pattern wherein retail investors overextrapolate influencers’ past returns rather than rational learning in the social network from their past performance. The transmission bias is amplified by two mechanisms: (1) influencers’ active social engagement and (2) their index fund-heavy portfolios. Evidence further reveals influencers’self-enhancing reporting through selective performance disclosure. Crucially, the dynamics ultimately increase risk exposure and impair returns for follower investors.

We conceptually identify and empirically verify the features distinguishing FinTech platforms from non-financial platforms using marketplace lending data. Specifically, we highlight three key features: (i) Long-term contracts introducing default risk at both the individual and platform levels; (ii) Lenders’ investment diversification to mitigate individual default risk; (iii) Platform-level default risk leading to greater asymmetric user stickiness and rendering platform-level cross-side network effects (p-CNEs), a novel metric we introduce, crucial for adoption and market dynamics. We incorporate these features into a model of two-sided FinTech platform with potential failures and endogenous participation and fee structures. Our model predicts lenders’ single-homing, occasional lower fees for borrowers, asymmetric p-CNEs, and the predictive power of lenders’ p-CNEs in forecasting platform failures. Empirical evidence from China’s marketplace lending industry, characterized by frequent market entries, exits, and strong network externalities, corroborates our theoretical predictions. We find that lenders’ p-CNEs are systematically lower on declining or well-established platforms compared to those on emerging or rapidly growing platforms. Furthermore, lenders’ p-CNEs serve as an early indicator of platform survival likelihood, even at the initial stages of market development. Our findings provide novel economic insights into the functioning of multi-sided FinTech platforms, offering valuable implications for both industry practitioners and financial regulators.

We investigate the impact of financial geographic density on corporate financial asset holdings in emerging market. We proxy for financial geographic density by calculating the number of financial institutions around a firm within a certain radius based on the geographic distance between the firm and financial institutions. Using data on publicly listed A-share firms in China from 2011 to 2021, we find that financial geographic density has a positive impact on nonfinancial firms’ financial asset investments, especially for the firms located in regions with a larger number of banking depository financial institutions or facing greater market competition. An increase in the number of financial institutions surrounding firms increases corporate financial asset holdings by alleviating information asymmetry. Moreover, we document that Fintech has little impact on the relationship between financial geographic density and corporate financial asset holdings. As the rise of financial geographic density, firms hold more financial assets for precautionary motives, which contribute to corporate innovation.

Financial technology, also known as Fintech, is transforming our daily life and revolutionizing the financial industry. Yet at present, consensus regarding the effect of Fintech on green bonds market is lacking. With novel data from China, this study documents robust evidence showing that Fintech development can significantly boost green bonds issuance. Further analysis suggests that this promotion effect occurs by empowering intermediary institutions and increasing social environmental awareness. Additionally, we investigate the heterogeneous effect and find that the positive relation is more pronounced for bonds without high ratings and in cities connected with High-Speed Railways network. The results call for the attention from policymakers and security managers to take further notice of Fintech utilization in green finance products.

Compared to previous literature on external FinTech, this paper is more interested in the role played by bank FinTech. Based on panel data from Chinese commercial banks spanning 2010 to 2021, this paper investigates the impact of digital transformation on bank soundness and its potential mechanisms. The empirical findings demonstrate a positive association between digital transformation and bank soundness, driven primarily by strategic and management digitization. Mechanistic analysis indicates that digital transformation improves bank soundness by mitigating risk-taking behavior and promoting diversification. The positive effect of digital transformation is more pronounced in state-owned and joint-stock banks, banks with higher liquidity mismatch as well as in sub-samples with greater levels in external FinTech development and economic policies uncertainty. Additional analysis suggests that digital transformation can still enhance bank soundness even in the presence of relatively easy monetary and macroprudential policies, highlighting the harmonization and complementarity between internal innovation from digital transformation and external regulatory policies in maintaining banking stability. Overall, this paper contributes to the literature on bank FinTech, factors influencing bank stability. And it also provides a novel explanation for the relationship between financial innovation and financial stability.

The enforcement of peer-to-peer (P2P) registration requirements in mid-2018 triggered a P2P market meltdown, highlighting the inherent challenge faced by Chinese market participants in distinguishing between genuine and fraudulent fintech firms. The difference-in-difference results suggest that the too-big-to-fail (TBTF) perception can effectively halve investor outflows and borrower outflows during periods of uncertainty. Dynamic analysis further validates the parallel-trend assumption and underscores the persistent influence of TBTF perception. Moreover, the empirical findings suggest that, in the face of a market downturn, fintech market participants become unresponsive to all other certification mechanisms, including venture capital participation, custodian banks, and third-party guarantees.

How does information sharing affect consumers' usage of FinTech credit? Using a unique dataset of ``Buy Now, Pay Later (BNPL)" users from a large digital platform and exploiting a credit reporting policy change, we document that consumers significantly reduce their usage of BNPL credit when the BNPL lender becomes subject to credit reporting regulation. This reduction is more pronounced among borrowers with previous default records, who also become more disciplined in repayment behaviors, than those without such records. The decrease in BNPL usage also leads to a reduction in online consumption, supporting the financial constraint hypothesis. Our results suggest that information sharing can help alleviate overborrowing and overspending, with stronger effects observed among younger borrowers, those who previously consumed more, or those with credit cards. We also highlight the synergies between BNPL lending and Big Tech platforms' ecosystems, which imperfectly substitute for formal enforcement institutions.

In this paper, we investigate whether those enterprises adopting digital finance exhibit higher values. On the basis of the constructed fintech-related lexicon developed by the machine learning-based Word2Vec model, we employ the frequency of fintech-related words (phrases) in the management discussion sections of annual reports as a proxy variable for the degree to which enterprises apply digital finance. We utilize panel data regression and mediation models based on data of Chinese A-share listed companies from 2016 to 2022 and explore the impact of this degree of digital finance application on enterprise value. We find that the degree to which enterprises apply digital finance elevates their values. The in-depth integration of digital technology and finance directly enhances enterprise value by reducing financing costs. Additionally, the effects are more evident among small-scale firms and enterprises located in regions with lower marketization levels. However, in the face of the impact of the COVID-19 pandemic, the positive effects on enterprises are relatively low.