Research ArticleOpen AccessGoogle Scholar indexed
FinTech Development, Shadow Banking, and Stock Market Activity in China: Insights from a TVP-SV-VAR Modeling
Shengxiang Business School, Sanda University, Shanghai, China
Shengxiang Business School, Sanda University, Shanghai, China
- 1 Shengxiang Business School, Sanda University, Shanghai, China
- 2 Shengxiang Business School, Sanda University, Shanghai, China
Theoretical Economics Letters·Volume 14 (2024)·Pages 1488–1496·Published 15 July 2024·DOI10.4236/tel.2024.144072
Copy link · social · email
Abstract
We adopt a time-varying parameter vector autoregressive model with stochastic volatility (TVP-SV-VAR) to unveil the dynamic nexus between FinTech development, shadow banking, and stock market activity in China. Our analysis highlights the consistent suppressive effect of FinTech on the growth of shadow banking and the diminishing positive effect on stock market activity. The effects show noticeable time-varying characteristics. Besides, the impacts of relevant policy measures regarding FinTech tend to decay over time. We also observe a divergence in the impacts of shadow banking on different types of stocks. This study encapsulates the intricate connections and evolving influences among FinTech, shadow banking, and the stock market.
KeywordsFinTech DevelopmentShadow BankingTime-Varying Impulse ResponseTVP-SV-VAR
- Banna, H., Kabir Hassan, M., & Rashid, M. (2021). Fintech-Based Financial Inclusion and Bank Risk-Taking: Evidence from OIC Countries. Journal of International Financial Markets, Institutions and Money, 75, Article ID: 101447. https://doi.org/10.1016/j.intfin.2021.101447
- Buchak, G., Matvos, G., Piskorski, T., & Seru, A. (2018). Fintech, Regulatory Arbitrage, and the Rise of Shadow Banks. Journal of Financial Economics, 130, 453-483. https://doi.org/10.1016/j.jfineco.2018.03.011
- Cornelli, G., Frost, J., Gambacorta, L., Rau, P. R., Wardrop, R., & Ziegler, T. (2023). Fintech and Big Tech Credit: Drivers of the Growth of Digital Lending. Journal of Banking & Finance, 148, Article ID: 106742. https://doi.org/10.1016/j.jbankfin.2022.106742
- Deng, C., & Wu, J. (2023). Macroeconomic Downside Risk and the Effect of Monetary Policy. Finance Research Letters, 54, Article ID: 103803. https://doi.org/10.1016/j.frl.2023.103803
- Fang, Y., Wang, Q., Wang, F., & Zhao, Y. (2023). Bank Fintech, Liquidity Creation, and Risk-Taking: Evidence from China. Economic Modelling, 127, Article ID: 106445. https://doi.org/10.1016/j.econmod.2023.106445
- Guo, P., Cheng, M., & Shen, Y. (2022). Fintech Adoption and Bank Risk-Taking: Evidence from China. Applied Economics Letters, 31, 594-602. https://doi.org/10.1080/13504851.2022.2140755
- Hodula, M. (2022). Does Fintech Credit Substitute for Traditional Credit? Evidence from 78 Countries. Finance Research Letters, 46, Article ID: 102469. https://doi.org/10.1016/j.frl.2021.102469
- Hu, G., Liu, S., Wu, G., Hu, P., Li, R., & Chen, L. (2023). Economic Policy Uncertainty, Geopolitical Risks, and the Heterogeneity of Commodity Price Fluctuations in China—An Empirical Study Based on TVP-SV-VAR Model. Resources Policy, 85, Article ID: 104009. https://doi.org/10.1016/j.resourpol.2023.104009
- Jagtiani, J., & Lemieux, C. (2018). Do Fintech Lenders Penetrate Areas That Are Underserved by Traditional Banks? Journal of Economics and Business, 100, 43-54. https://doi.org/10.1016/j.jeconbus.2018.03.001
- Li, W., Wang, S., & Xu, C. (2023). Has Shadow Banking Promoted Interest Rate Liberalization? Empirical Evidence from Chinese Commercial Banks. Applied Economics Letters . https://doi.org/10.1080/13504851.2023.2211330
- Nakajima, J. (2011). Time-Varying Parameter VAR Model with Stochastic Volatility: An Overview of Methodology and Empirical Applications. Monetary and Economic Studies, 29, 107-142.