Published Online:November 2026
Product Name:The IUP Journal of Bank Management
Product Type:Article
Product Code:IJBM02112025
DOI:10.71329/IUPJBM/2025.24.4.16-34
Author Name:Tapal Dulababu
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:16-34
This study examines the impact of fintech adoption on the stability of scheduled commercial banks in India during 2016-2025. Utilizing a comprehensive panel dataset, the analysis links fintech indicators—such as share of digital transactions, fintech partnerships, and digital loan volumes—to key measures of bank stability, including Z-score, nonperforming asset (NPA) ratios, and return on assets (ROA). Employing a dynamic panel estimation approach through System Generalized Method of Moments (System GMM), the study addresses potential endogeneity and unobserved heterogeneity among banks. The findings demonstrate that increased fintech adoption enhances bank stability by reducing insolvency risk and credit defaults, while improving profitability. Recent regulatory initiatives, including digital banking guidelines and regulatory sandboxes, strengthen these positive effects. Robustness checks, using alternative dependent variables and subsample analyses by ownership type (public sector versus private sector banks), reaffirm the results. The study integrates theoretical perspectives from diffusion of innovation and financial intermediation frameworks, conceptualizing fintech as both a disruptor and a facilitator of traditional banking resilience. Policy implications emphasize promoting digital innovation alongside stringent prudential regulation to ensure financial system stability in India’s evolving economic landscape. Overall, the study provides compelling empirical evidence that fintech adoption significantly contributes to banking sector stability in emerging markets.
Over the past decade, significant transformations in global finance were driven by financial technology (fintech) innovations. India stands out for its rapid digital expansion and large unbanked population, positioning it as a leading context for fintech-driven change. From 2016 to 2025, fintech adoption introduced new business models, payment systems, and lending platforms, significantly enhancing financial inclusion