Abstract
Utilizing an innovative financial technology (FinTech) index based on media sources, we analyse the effects of FinTech adoption on bank liquidity creation for a sample of the top 300 United States banks from Q1 2015 to Q2 2021. Our findings reveal a consistent negative association between FinTech adoption and bank liquidity creation, even during the coronavirus disease (COVID-19) pandemic. This relationship remains robust after conducting multiple rigorous tests including propensity score matching and difference-in-differences tests to address endogeneity problems. Overall, these results underscore the transformative influence of FinTech on fundamental liquidity creation function within traditional banking.
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