Dissertation on FinTech Development and Banks’ Risk-taking

The general topic (topic) has been set: FinTech Development and Banks’ Risk-taking. Other parts of the paper, such as choosing a bank in a certain country or a bank in the world during the research, have not been determined. Just answer the following questions directly. It’s okay.

Now I need to communicate with my instructor and I need to answer the following questions. It is recommended to answer after referring to enough documents

-What’s your main objective(s)?

-What questions (‘research questions’) are associated with your objective(s)?

-What’s your contribution (i.e., what’s different in your dissertation, something no-one did before-at least not for the country/sector you’re considering)?

-Why is your topic important? Who would benefit from it?

-What’s your sample? For instance, what type of institutions? Which country? Why?

-What’s your sample period? Why?

-What method(s) you’re going to use? Why?

-What software are you going to use?

The proposal written before is attached below (not detailed, need reference)

Proposal summary (Guidance: 50-100 words)

This paper is going to empirically discuss the relationship between FinTech development and banks’ risk-taking. In this research, I will use banking data from a specific country, but the country has not been decided currently. Further thinking needs to determine the country.

I am going to assess how will FinTech development impact banks’ risk-taking after controlling other potential risk factors. I also want to discuss whether the impact of FinTech development on bank risk-taking related to some characteristics (such as size, liquidity, interest income, etc.) of the bank.

Existing concepts – How does your study relate to existing theories and concepts? (Guidance: 20-150 words)

After reading the previous literature, I find that a lot of articles using z-score as an indicator of banks’ stability. However, the specific formula and the variables using in the formula have different versions. Besides z-score, other models such as Sharpe ratio, the ratio of the loan loss reserve to gross loans can also be used to assess banks’ risk-taking.

In terms of FinTech development, media’s attention paid to FinTech-related information, bitcoin price and the number of newly registered FinTech companies can be used to measure the development of financial technology. In terms of the relationship between FinTech development and bank risk-taking, several different views can be concluded from previous literature. Wang, Liu and Luo (2020) conclude that the relationship between FinTech and banks’ risk-taking is a U-shaped trend. Holland, Lockett, and Black (1997) stated that the increasing use of information technology could bring enormous risk to commercial banks.

Research questions – What are your research questions? (Guidance: 30-150 words)

• What is the relationship between FinTech development and bank risk-taking?
• Is the impact of the development of financial technology on bank risk-taking related to some characteristics (such as size, liquidity, interest income, etc.) of the bank?

Data sources – What research methods/data sources do you plan to use? (Guidance: 10-100 words)

• For data related to bank risk-taking, I plan to find out and use the database which focusing on global banks. Hopefully, I can obtain the key characteristics (such as size, liquidity, interest income, etc.) and financial statements of banks from that database
• For data related to FinTech development, I will try to find different predictors that could indicate the development of FinTech. After that, I will collect the data from different databases according to the predictors I needed.
• Some macroeconomic data may be collected on the website of the International Monetary Fund, World Bank, etc.

Proposal references – Please provide full references for up to 5 key books/articles used to develop this proposal

Ashraf, B., 2017. Political institutions and bank risk-taking behavior. Journal of Financial Stability, 29, pp.13-35.

Laeven, L. and Levine, R., 2008. Bank Governance, Regulation, and Risk Taking. SSRN Electronic Journal,.

Phan, D., Narayan, P., Rahman, R. and Hutabarat, A., 2020. Do financial technology firms influence bank performance?. Pacific-Basin Finance Journal, 62, p.101210.

Romānova, I. and Kudinska, M. (2016), “Banking and Fintech: A Challenge or Opportunity?”, Contemporary Issues in Finance: Current Challenges from Across Europe (Contemporary Studies in Economic and Financial Analysis, Vol. 98), Emerald Group Publishing Limited, pp. 21-35.

Wang, R., Liu, J. and Luo, H., 2020. Fintech development and bank risk taking in China. The European Journal of Finance, 27(4-5), pp.397-418.