Systemic Risk and Financial Stability: The Role of Fintech in Emerging Markets

Abstract

This study aims to investigate the effects of FinTech disruption on systemic risk and economic stability of emerging economies including Pakistan, Nepal and Bangladesh. In the context of the present investigation, the author employed data from ten banks for the years 2018-2022 and singled out two aspects of FinTech at once as a stabilizing factor in the market and as a source of risk. Higher FinTech usage in operational activities in Pakistan that enhanced operational resilience and limited digital integration in Nepal that increased systemic risk. The econometric analysis demonstrates the positive impact of FinTech on financial stability alongside mixed impacts on systemic risk owing to decentralized structures and regulatory complexities. The research implications provide policy contributions to manage innovation with caution that serves the improvement of sustainable financial systems in EMs.