FinTech as a Financial Liberator
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发布日期:2021年12月27日 上次修订日期:2022年03月19日


Financial repression—regulating interest rates below the laissez-faire equilibrium—has historically impeded investment in developing economies. In China, bank deposits were long subject to binding interest rate caps. Using transaction and local penetration data from a leading FinTech payment company, we study the FinTech’s introduction of a money market fund (MMF) with deposit-like withdrawal features but uncapped interest rates aids in interest rate liberalization. In aggregate, MMF assets grow rapidly, and banks whose deposit base was more exposed to the payment app see greater outflows. These outflows are concentrated in household demand deposits, for which the MMF is the closest substitute. Contrary to regulator concerns, exposed bank profitability does not decline. Rather, exposed banks invest more in financial innovation and are more likely to launch competing funds with similar features. Our results highlight how FinTech competition stimulates interest rate liberalization among traditional banks by introducing competition for funding.

Greg Buchak ; Jiayin Hu ; Shang-Jin Wei ; FinTech as a Financial Liberator (2021年12月27日)

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