The 21th Academic Luncheon of the Digital Technology and Finance

Abstract：

In a two-period model of payment and credit markets competition, we show that a bank's profits can decrease when it adopts new information technology. IT complements payment data in helping the bank to learn about consumers' credit quality, dubbed as the information effect of technology adoption. However, the information effect has to be traded off against a negative competition effect as consumers in the first period deliberately switch to purchase tech firms' payment services to induce fiercer second period credit market competition. Interestingly, when two fintech firms compete in the payment and the credit markets with the bank separately, the competition effect always dominates. However, the information effect can dominate when the bank faces a big tech firm who operates in both markets.

Speaker Introduction：

Zhao Li is an associate professor at the School of Finance, Zhongnan University of Economics and Law. His main research directions are banking theory and financial supervision, and his achievements have been published in journals such as Management Science and Journal of Economic Dynamics and Control. He is currently presiding over a general project (ongoing) and a youth project (excellent in conclusion) funded by the National Natural Science Foundation of China. Li Zhao obtained a double bachelor's degree in economics and mathematics from Wuhan University, a master's degree in finance and economics from Wuhan University and Toulouse School of Economics in France, and a doctor's degree in finance from Universitat Pompeu Fabra in Spain.