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EL NAWAR Jason_15002100_2026.pdf
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- Financial technology is unbundling the vertically integrated bank. Liquidity provision, screening, monitoring and risk transformation were once performed together under a single license, they are now distributed across specialized firms. How that redistribution effects incumbent banks determines both how credit is supplied and how it should be regulated. The fact that fintech has grown is not in dispute, but the impact of its growth is. A fintech substitutes for the bank, credit migrates outside a perimeter built over a century of crisis and reforms. If it complements the bank, the same grows strengthens the incumbent. It doesn’t stop here with new wave of innovation comes new risk types and effect over systemic risk of the financial system. The thesis answers the question in three stages. At first compares the economic functions of traditional banking with the mechanisms of fintech. Then follows an empirical study examining a panel of 10,167 financial institutions across 57 countries over the 2012-2020 period, Relating fintech credit volumes to bank margins, fee income, costs and returns. It finally tests the European regulatory regime against the activities that the framework should capture about this new wave of innovation, so it doesn’t lead us to a financial and economic collapse. Three findings emerge, first, the dividing line in the locus of credit exposure rather than the technology. Platforms that match lenders with borrowers without holding the loan complement the bank and raises its returns. Firms that retain credit on their own balance sheet compress those margins and returns. Second, cooperative banks absorb most of the shock and the sign reverses for commercial banks that are placed in a high quality regulatory environment. Fintech does not remove risk from credit intermediation it relocates it. Systemic risk falls as claims leave backstop balance sheets, and consumer risk takes its place. Born by savers and borrowers who neither price the exposure nor hold capital against it. Authorization should attach to the retention of credit exposure, and algorithmic underwriting should be regulated by testing outcomes instead of prohibiting inputs.