Abstract
The banking sector has changed fundamentally as digital transformation is enabling new technology-driven banking business and creating novel customer requirements. Embracing bank-FinTech strategic collaboration (FSC) has been particularly vital to digital transformation of Chinese city commercial bank. The aim of this paper is to study the impact of FSC on the efficiency of city commercial banks. Using data from Chinese city commercial banks between 2014 and 2019, we first measure bank efficiency scores using stochastic frontier approach. Moreover, we employ the propensity score matching approach and the difference in difference estimation to explore the effect of FSC on bank efficiency. We find that FSC significantly improves bank cost and interest revenue efficiency in the aggregate. Our results also indicate that the positive relationship between FSC and cost efficiency is negatively associated with bank ownership concentration. In addition, the positive effects of FSC on revenue efficiency are weaker in state-owned city banks than in non-state-owned city banks.
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