Faculty of Economics and Business, Airlangga University held a guest lecturer on Tuesday (4/9), to discuss the recent study about financial Industry in Indonesia focused on the financial technology industry.
Professor Paresh Narayan from Deakin University, Australia presented the study titled “Do Financial Technology Firms Influence Bank Performance?” which also supported by The Central Bank of Indonesia. The research developed a hypothesis that the growth of financial technology (FinTech) negatively influences bank performance.
According to Prof Narayan, “We test our main conclusion through multiple additional and robustness tests, such as the sensitivity to bank characteristics, effects of the global financial crisis, and the use of alternative estimators.”
Some of the interesting findings also explained in the lecturer. The effects are varied in term of size, age and the ownership of the bank. In term of size, High Market Value Banks are more affected by the financial technology industry compared to Less Market Value Banks. In connection with the age of the bank, the new bank is less affected than the old one because they are more competitive with the industry to adapt to the latest change. Furthermore, as regards of the bank ownership, the state-owned bank is more affected at least two times than the private one.
“Using a sample of 41 banks and data on FinTech firms, we show that the growth of FinTech firms negatively influences bank performance. Our main conclusion that FinTech negatively predicts bank performance holds,” he concluded.