Fintech and financial stability

Authors: Stefanos Ioannou*, University of Oxford, Dariusz Wojcik, School of Geography and the Environment, University of Oxford, Michael Urban, School of Geography and the Environment, University of Oxford
Topics: Economic Geography, Qualitative Research
Keywords: fintech, financial stability
Session Type: Virtual Paper
Day: 4/9/2021
Start / End Time: 1:30 PM / 2:45 PM
Room: Virtual 47
Presentation File: No File Uploaded


Literature on fintech has been growing rapidly over the last few years. Informed by contributions from financial geography, the topic has been approached from various starting points, including entrepreneurial ecosystems, financial ecologies, platforms and networks. Nonetheless, the aspects of fintech related to financial instability have received very little attention, save from discussion on the implications of cryptocurrencies. In this presentation we provide an initial set of reflections, aiming to cover this lacuna. Our contribution focuses, in particular, on the two largest segments of fintech, namely fintech lending and payment platforms; as well as robo-advising. All three segments can develop in ways that amplify the overall instability of the financial sector, something which in turn can have repercussions on income and wealth inequality, and financial inclusion. P2P lending, for example, can be used for refinancing existing household debts, thereby fuelling unsustainable debt positions – what Minsky calls speculative and Ponzi finance. Likewise, the extensive use of deposit accounts offered by fintech platforms can make a bank run more likely, inasmuch as such deposits remain outside the coverage of deposit guarantee schemes, and are thus deprived of the liquidity that characterises incumbent banks’ accounts. In order to support our discussion, we use evidence from semi-structured interviews conducted in Latin America, China and the US during the period 2019- 2020. Overall, while fintech has a potential to improve the quality of day-to-day financial services, such potential might become largely compromised if financial instability concerns are not addressed from an early stage.

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