Fintech adoption, the regulatory environment and bank stability: An empirical investigation from GCC economies

Habib Hussain Khan*, Shoaib Khan, Abdul Ghafoor

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    6 Citations (SciVal)


    The study analyzes the impact of fintech adoption on the banking sector's stability in GCC countries from 2010 to 2022. The study also considers the role of fintech regulations in this framework. We construct an index of fintech adoption by banks by considering several factors such as banks' digital presence, mobile banking capabilities, support for open APIs, fintech partnerships, digital payment solutions, automation and artificial intelligence integration, innovation initiatives, user experience focus and embracing new technologies. The regulatory environment is measured through the existence or introduction of fintech-related regulations such as the regulatory sandbox. The findings imply that fintech adoption has reduced banks' stability in GCC. The fintech-stability relationship varies over various bank-specific and country-specific variables. For instance, large and well-capitalized banks are less likely to experience adverse effects of fintech adoption. Moreover, the negative impact of fintech on financial stability is lower for Islamic, foreign and government banks. In addition, banks operating in well-developed and more competitive banking sectors experience lower financial instability when adopting fintech innovation. We confirm these findings with an alternative indicator of fintech adoption. The study also discusses essential policy implications for the sample countries.
    Original languageEnglish
    Pages (from-to)1263-1281
    Number of pages19
    JournalBorsa Istanbul Review
    Issue number6
    Publication statusPublished (VoR) - 4 Nov 2023


    This research has been funded by the Deputy for Research & Innovation , Ministry of Education , through the Initiative of Institutional Funding at the University of Ha'il , Saudi Arabia, through project number IFP-22057 .

    FundersFunder number
    Deputy for Research & Innovation
    University of HailIFP-22057
    Ministry of Education – Kingdom of Saudi Arabi


      • Fintech
      • Regulatory sandbox
      • Financial institutions
      • Saudi Arabia
      • GCC


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