Does Fintech development have a diverse impact on banking performance and stability? A panel study of Indian banks

This paper investigates the influence of fintech on banking performance and stability using a sample of Indian banks from 2013 to 2022. The investigation was carried out using feasible generalized least squares and Quantile regression while the robustness of the results was demonstrated using GMM. Consistent across all models, the study found that fintech hurts the performance and stability of banks. The ownership structure shows that public and foreign banks had no effect, private banks benefit, and cooperative banks suffer from fintech innovation. With the exception of Private banks, fintech has a detrimental effect on the stability of traditional banks. The research also indicated that fintech developments negatively affect non-performing loans (NPL), suggesting that banks can minimize their NPLs by employing fintech departments. This is the first research that examines the effects of fintech on bank performance, stability, and loan performance in the Indian banking sector. The study offers some suggestions and recommendations to policymakers.