Investigating the temporal and spatial evolution of bank performance and its impact pathways in the context of financial technology development

Abstract

Financial technology transforms humans and businesses as globalization and the digital economy accelerate. This affects bank performance. Thus, studying whether financial technology affects bank performance is crucial to enhancing living standards and business development. This article examines the development and interaction between financial technology and bank performance from 2012 to 2021 using standard deviation ellipses, kernel density estimation, Moran's index, and spatial econometric models. The research found that (1) financial technology development improves regional bank performance. In contrast, control variables like economic development, urbanization, tax burden, capital adequacy ratio, net interest margin, and loan-to-deposit ratio also affect bank performance. (2) From 2012 to 2021, Chinese bank performance initially grew, then declined, while financial technology declined slowly and improved rapidly. Financial technology and bank performance development were highest in the eastern coastal regions and lowest in the northwest and northeast. (3) China's financial technology and bank performance had high-high or low-low spatial agglomeration. (4) Financial technology and control variables have a spatial spillover effect on bank performance, so their development in one region can affect neighboring regions. This article provides recommendations for governments and banks based on these findings.