Featured Product

    IMF Paper on Impact of Lender Fintech Adoption on Financial Stability

    January 17, 2020

    IMF published a working paper that analyzes the financial stability implications of information technology (IT) adoption by lenders. The study estimates bank-level intensity of IT adoption before the global financial crisis using a novel dataset that provides information on hardware used in U.S. commercial bank branches after mapping them to their parent bank. The evidence presented in the paper suggests that the “fintech era” is likely to be beneficial to financial stability, as adoption of technology by lenders has resulted in better borrower selection.

    The study finds that higher intensity of IT adoption led to significantly lower non-performing loans when the crisis hit: banks with a one standard deviation higher IT adoption experienced 10% lower non-performing loans. High-IT-adoption banks were not less exposed to the crisis through their geographical footprint, business model, funding sources, or other observable characteristics. However, loan-level analysis indicates that high-IT-adoption banks originated mortgages with better performance and did not offload low-quality loans. Loans originated by high-IT banks experienced lower delinquency rates during the crisis, even when they were securitized and sold to Freddie Mac. Therefore, the results indicate that IT adoption helped banks to select better borrowers and produce more resilient loans. Additionally, the study used the application of a simple text-analysis algorithm to the biographies of top executives and found that banks led by more “tech-oriented” managers adopted IT more intensively and experienced lower non-performing loans during the crisis. Thus, the results suggest that technology adoption in lending can enhance financial stability through the production of more resilient loans.

     

    Related Link: Working Paper (PDF)

     

    Keywords: International, Banking, Fintech, Credit Risk, NPLs, Financial Stability, IMF

    Related Articles
    News

    EBA Publishes Standards on Disclosure of Investment Policy Under IFR

    The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).

    October 19, 2021 WebPage Regulatory News
    News

    EBA Updates Filing Rules for Supervisory Reporting

    The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance for New Prudential Standard on Remuneration

    The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.

    October 18, 2021 WebPage Regulatory News
    News

    OCC Updated LIBOR Self-Assessment Tool for Banks

    The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).

    October 18, 2021 WebPage Regulatory News
    News

    TCFD Updates Guidance for Financial Disclosures on Climate Risk

    The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

    October 14, 2021 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel III Framework

    The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.

    October 14, 2021 WebPage Regulatory News
    News

    ACPR Implements Updates Related to DPM Version 3.1

    The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.

    October 14, 2021 WebPage Regulatory News
    News

    EBA Note Examines Transition Risks of Benchmark Rates

    The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.

    October 14, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7571