The Impact of Fintech on Banking: Evidence from Banks' Partnering with Zelle

15:40-17:00, Friday, May 24, 2024

I-206, Boxue Building, DUFE

Dr. Yajun Xiao is an Associate Professor of Finance at the International Business School Suzhou at XJTLU. His research focuses on asset pricing and market friction, corporate financing and credit risk, as well as the interactions between the macro economy and banking. Yajun holds a BS in engineering from Tongji University, a MS in mathematics from the University of Kaiserslautern, and a PhD in finance from Goethe University Frankfurt. He has published papers in Review of Finance, Journal of Money, Credit and Banking, Review of Asset Pricing Studies, Journal of Economic Dynamics and Control.

We assess the network effect of Zelle - a real-time money transfer platform on banking. First, Zelle penetration that banks face positively affects banks' decision to partner with Zelle. Second, banks' Zelle partnership and Zelle penetration in the local market that the bank operates in has a substantial impact on deposits, lending, and branching. Specifically, after partnering with Zelle, banks grow in deposits and small business lending and increase branching (at the expense of simultaneous branch closure by non-partnering banks) in the market with greater Zelle penetration. The positive network effect is not driven by deposit pricing as interest rates paid by banks on deposits are not affected by their Zelle partnering. Overall, our findings are consistent with an interactive nature of banks' technology adoption and a positive effect of Fintech on banks' competitiveness.

For more information of the seminar, scan the following QR code(s) to join Tencent QQ group (904 544 292) or WeChat group named "IAER Seminar (5)", please.

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