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  • A*

    Using a sample of U.S. community banks and FinTech loans data from LendingClub and Prosper, I find that banks’ future change in risk-taking is positively associated with their current exposure to FinTech penetration. Path analysis shows that FinTech penetration influences bank risk-taking through the erosion of bank charter value. Additionally, cross-sectional analysis shows that the risk-increasing effect of FinTech penetration is stronger for banks with lower ex-ante charter value and greater reliance on hard information. My results are robust to alternative measures of bank risk-taking and FinTech penetration, propensity score matching, and a battery of sensitivity and additional tests. Regarding policy implications, the findings imply that reasonable estimations of banks’ charter value may serve as an early indicator of banks’ future risk-taking incentives.

  • FT50 A*

    Using an international sample of IPO firms and two country-level measures of financial literacy, we find strong evidence that financial literacy is negatively associated with IPO underpricing. In cross-sectional analyses, we find that the effect of financial literacy in reducing IPO underpricing is more pronounced when the information environment is less transparent. Employing path analysis, we document that information friction, firm transparency, and stock market participation are mechanisms that mediate this relationship. Our study contributes to and extends the literature by providing strong evidence that citizens’ financial literacy has an important and consistent influence on IPO underpricing.

Last update from database: 9/16/24, 10:02 PM (AEST)