Effect of Fintech on the Cost Malmquist Productivity Index in the China Banking Industry

Abstract

Nowadays Fintect has been transformed from Fintect1.0 to Fintect2.0. In the recent years, China has seen that the Internet finance was first included in the government work report which was written into the thirteen five plan; biometrics, language processing, block chain and other technology applied to the financial do bring divinity to the entire financial system. In addition, the data center, credit system and other infrastructure construction gradually improved, the maturity of mobile phones and other mobile terminals is increasing continuously. As to reduce corporate financing costs and to improve capital utilization is one of the core of supply side reform is one of the core financial reform, examining the effect of Fintech development on the productivity in the China banking industry is an important issue. To investigate such potential effect, the study use the preferred Cost Malmquist Index to estimate the 35 listed sample banks over the period from 2007 to 2013. The empirical result suggests the observed period, 2012–2013, the ΔPTE, ΔT, ΔPE, and ΔCSE are improving by 0.02, 0.02, 0.48 and 0.16% respectively. Consistent with the objective of Fintech development, which attends to provide banking service in a more efficient operation and less cost. It provides the positive evidence to support an adoption of Fintech contribute a potential growth of competiveness of the China banking industry.