Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/249603 
Year of Publication: 
2021
Series/Report no.: 
BOFIT Discussion Papers No. 14/2021
Publisher: 
Bank of Finland, Bank of Finland Institute for Emerging Economies (BOFIT), Helsinki
Abstract: 
Using a unique FinTech data containing monthly individual-level consumption, investments, and payments, we examine how FinTech can lower investment barriers and improve risk-taking. Seizing on the rapid expansion of offline usages of Alipay in China, we measure individuals' FinTech adoption by the speed and intensity with which they adopt the new technology. Our hypothesis is that individuals with high FinTech adoption, through repeated usages of the Alipay app, would build familiarity and trust, reducing the psychological barriers against investing in risky assets. Measuring risktaking by individuals' mutual-fund investments on the FinTech platform, we find that higher FinTech adoption results in higher participation and more risk-taking. Using the distance to Hangzhou as an instrument variable to capture the exogenous variation in FinTech adoption yields results of similar economic and statistical significance. Focusing on the welfare-improving aspect of FinTech inclusion, we find that individuals with high risk tolerance, hence more risk-taking capacity, and those living in under-banked cities stand to benefit more from the advent of FinTech.
Subjects: 
FinTech
Digital Payment
Financial Inclusion
Consumption
Risk Taking
JEL: 
G11
G50
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-389-8
Document Type: 
Working Paper

Files in This Item:
File
Size
3.34 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.