The effects of digitalisation of European banks on the credit market
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2020-08-21
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en
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The world of banking will not stay the same during our lifetime. Digital products are already implemented in other industries, however the banking industry seems to be subordinated. The competition in the financial sector is increasing over the last decade, and if the banks don’t follow this digital revolution they might become redundant. The so-called Fintech companies are taking over market share in the financial industry by offering identical products but, compared to banks, through a digital platform only. This development will change the way money is being transferred from borrower to lender. Traditional banks have started offering digital financial services through online website and mobile phone applications the last years, yet these effects are still opaque. This study investigates the effects of digitalisation of European banks on their credit provision and how these digital financial services affected their total loans and non-performing loans (NPL). The data consists of 116 European banks divided over 20 countries from the period 1993-2018, which covers the first steps of the implementation of digital financial services. The results show that the gradual implementation of digital services increase the total loans and NPL of European banks, but deteriorates the bank’s credit provisioning.
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Faculteit der Managementwetenschappen