Impact of payment technology innovations on the traditional financial industry: A focus on China
By Meifang Yao, He Di, Xianrong Zheng, Xiaobo Xu. Technological forecasting & social change, 2018
153 citations recorded by the source corpus.
Abstract With the rapid advent of e-commerce in China, the technological innovation of third-party payment has experienced explosive growth. This important technological innovation, initiated by emerging Internet companies, is helping the traditional financial industry's payment business—represented by commercial banks—expand in both depth and breadth. Meanwhile, there is also a large degree of substitution, competition and crowding out among these banks in terms of the traditional financial industry's basic payment and settlement functions, potential customers, deposit and loan services and traditional intermediary business. This paper explores the impact (episodic and long-term steady-state) of the technological innovation of payment on commercial banks. It also considers the impact of technological innovation on industrial evolution to clarify whether technological innovation offsets the advantages of traditional industries or promotes industrial development. This study adopts the Vector Auto-Regression (VAR) impulse response model to analyze the impact of Internet Third-Party Payment (TPP) on the traditional financial industry from 2007 to 2014. The empirical results suggest that in China, third-party payments have had a significant positive correlation with the value creation capabilities of traditional financial industries, and that this relationship tends to remain in a steady state in the long term. Based on these findings, this paper confirms that the technological innovation of methods of payment in emerging economies, such as China, has promoted the development of the financial industry and accelerated the process of industrial evolution. We conclude the paper with feasible policy suggestions.
Subfields: Economics and Econometrics, Management Information Systems, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/5143663840988a3491b9ce741ddcec28558fc21b
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Citations in the corpus
- Risk spillovers between FinTech and traditional financial institutions: Evidence from the U.S. (2020, background): “As new entrants, FinTech players are intrinsically linked to traditional financial institutions for the following three main reasons: (i) they compete in similar market segments and in similar businesses (Dorfleitner et al., 2017; Yao et al., 2018; Kommel et al., 2018); (ii) they cooperate closely (”
- Fintech investments in European banks: a hybrid IT2 fuzzy multidimensional decision-making approach (2021, background): “Furthermore, consistent with Yao et al. (2018a, b) and Ramos-de-Luna et al. (2016), our findings illustrate that money transferring is another important Fintech-based investment alternative.”