Assessing systemic risk spillovers from FinTech to China's financial system

Today, the potential of FinTech in China is immense. After a prolonged period of dormancy, a blazing trail in finance surges. This study estimates the extent to which risk is transmitted from FinTech to various sub-industries within the Chinese financial sector, employing the GARCH copula quantile regression model. Our empirical findings indicate that FinTech exerts significant risk spillover effects on these financial sub-industries. Notably, at lower risk levels of 0.1 and 0.05, the securities and state-owned commercial banks sub-industries demonstrate the most substantial and least significant risk spillovers, respectively. Conversely, at the highest risk level of 0.01, the joint-stock commercial banks and securities exhibit the largest and smallest risk spillovers, respectively. Additionally, our analysis reveals that the dynamic risk spillovers for each financial sub-industry differ and reflect the influences of the stock market crash that occurred during 2015-2016. The implications of our study extend to portfolio managers and financial authorities, highlighting the importance of enhancing supervision and regulation of FinTech companies to uphold financial stability.