Fintech Adoption and Bank Risk, Efficiency and Stability: Evidence from Panel Data of Selected Asian Economies

Asia presently houses some of the top and dynamic economies in the world. These nations have also experienced a high rate of fintech adoption within their banking sectors. This paper examines the impact of fintech adoption and integration on the efficiency and stability of banks in 9 Asian countries, using panel data from 85 banks spanning 11 years from 2014 to 2024. The paper first analyzes the impact of fintech on banks across all selected countries and then, on a stratified basis, divides them into three categories: developed economies, large economies, and emerging countries. We use NPL and PLL as proxies for risk, efficiency ratios, and the cost-to-income ratio as efficiency measures, and the stability ratio and Z-score as indicators of stability. Ordinary least squares and fixed-effect techniques have been applied to estimate the results. Results show that fintech adoption reduces bank risk, presents mixed effects on efficiency, and strongly supports bank stability. Moreover, total assets and ROA consistently demonstrate lower risk, higher efficiency, and greater stability. Based on the findings, this research suggests that policymakers must adopt strategies to maximize the benefits.