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<p>This study investigates the impact of FinTech adoption on the stability of the Indian banking industry, focusing on non-performing assets, liquidity, and solvency. Using a balanced panel of 30 scheduled commercial banks over the period 2016–2024, the analysis integrates multiple FinTech indicators, namely investments, digital financial services, emerging innovations, and infrastructure, alongside bank-specific variables such as non-performing loans and size, and macroeconomic factors including inflation and credit growth. We employed static panel models and generalized method of moments (GMM) techniques to address endogeneity, heterogeneity, and persistence. The findings reveal that emerging innovations and digital financial services exhibit destabilizing tendencies in the initial period by raising NPAs and weakening liquidity. However, these risks moderate over the sample period, reflecting stricter regulations. In contrast, Fintech investments and infrastructure consistently enhance liquidity buffers but show mixed effects on solvency. Bank size and credit quality serve as important mediating channels, while inflation and credit growth condition the effectiveness of FinTech adoption. The study offers actionable insights for managers, regulators, and shareholders, highlighting the need for calibrated digital investments, enhanced risk governance, and macro-financial alignment to ensure technology-driven resilience in the Indian banking system.</p>

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FinTech adoption, credit risk, and banking stability: evidence from Indian banks

  • 期刊论文

  • 发表日期：

    2026年3月31日

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  • Mohammad Ammar Ahsan,
  • Faiz Ur Rehman,
  • Shakeb Akhtar,
  • Mahfooz Alam,
  • Haseeb Ur Rahman,
  • Smita Dayal

摘要

This study investigates the impact of FinTech adoption on the stability of the Indian banking industry, focusing on non-performing assets, liquidity, and solvency. Using a balanced panel of 30 scheduled commercial banks over the period 2016–2024, the analysis integrates multiple FinTech indicators, namely investments, digital financial services, emerging innovations, and infrastructure, alongside bank-specific variables such as non-performing loans and size, and macroeconomic factors including inflation and credit growth. We employed static panel models and generalized method of moments (GMM) techniques to address endogeneity, heterogeneity, and persistence. The findings reveal that emerging innovations and digital financial services exhibit destabilizing tendencies in the initial period by raising NPAs and weakening liquidity. However, these risks moderate over the sample period, reflecting stricter regulations. In contrast, Fintech investments and infrastructure consistently enhance liquidity buffers but show mixed effects on solvency. Bank size and credit quality serve as important mediating channels, while inflation and credit growth condition the effectiveness of FinTech adoption. The study offers actionable insights for managers, regulators, and shareholders, highlighting the need for calibrated digital investments, enhanced risk governance, and macro-financial alignment to ensure technology-driven resilience in the Indian banking system.