The Role of Regulatory Capital in Shaping FinTech’s Impact on Bank Intermediation Costs

The Role of Regulatory Capital in Shaping FinTech’s Impact on Bank Intermediation Costs | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article The Role of Regulatory Capital in Shaping FinTech’s Impact on Bank Intermediation Costs Mohammed Mizanur Rahman, Naseef Talukder, Keoy kay Hooi, Mohammad Omar Faruq This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8315515/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted 14 You are reading this latest preprint version Abstract This research examines the influence of Fintech (Financial Technology) and regulatory capital on the bank intermediation cost. To achieve the objectives of the study, various regression techniques were utilized, including the System Generalized Method of Moments (GMM), Pooled Ordinary Least Squares (OLS), and the Vector Error Correction Model (VECM). The authors tested the hypothesis using data from 32 banks in Bangladesh, spanning 24 years (2000–2023). The revelation from the findings indicates that fintech adoption has a significantly negative effect on bank intermediation costs. Similarly, regulatory capital also shows a statistically significant negative relationship with intermediation costs, with these effects persisting over both long and short-term periods. Notably, Islamic banks display higher regression coefficients than conventional banks, suggesting that fintech and regulatory capital restrictions have a more pronounced impact on Islamic banking margins. The present study additionally highlights that the effect of fintech is more substantial during the Covid-19 period (2020 onwards) compared to the pre-Covid era (2000–2019). Additionally, Stochastic Frontier Analysis (SFA) indicates that increasing cost inefficiencies accelerate the intermediation costs. The study's findings provide key insights for policymakers, supporting the development of regulatory frameworks regarding the banking sector, predominantly in relation to fintech. Bank intermediation cost GMM estimation regulatory capital fintech cost inefficiency Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Under Review Version 1 posted Editorial decision: Revision requested 10 Mar, 2026 Reviewers agreed at journal 10 Mar, 2026 Reviews received at journal 05 Mar, 2026 Reviewers agreed at journal 05 Mar, 2026 Reviewers agreed at journal 04 Mar, 2026 Reviewers agreed at journal 04 Mar, 2026 Reviews received at journal 22 Feb, 2026 Reviews received at journal 03 Feb, 2026 Reviewers agreed at journal 02 Feb, 2026 Reviewers agreed at journal 01 Feb, 2026 Reviewers invited by journal 30 Jan, 2026 Editor assigned by journal 17 Jan, 2026 Submission checks completed at journal 15 Jan, 2026 First submitted to journal 15 Jan, 2026 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8315515","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":583696935,"identity":"f6c730b3-6e25-4177-bf8f-a037e4023fd0","order_by":0,"name":"Mohammed Mizanur Rahman","email":"data:image/png;base64,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","orcid":"","institution":"UCSI University","correspondingAuthor":true,"prefix":"","firstName":"Mohammed","middleName":"Mizanur","lastName":"Rahman","suffix":""},{"id":583696936,"identity":"fe63f32a-3a14-4005-bc86-087bf009421a","order_by":1,"name":"Naseef Talukder","email":"","orcid":"","institution":"UCSI University","correspondingAuthor":false,"prefix":"","firstName":"Naseef","middleName":"","lastName":"Talukder","suffix":""},{"id":583696937,"identity":"918c248d-0b11-4bc0-9205-1181646e6b6d","order_by":2,"name":"Keoy kay Hooi","email":"","orcid":"","institution":"UCSI University","correspondingAuthor":false,"prefix":"","firstName":"Keoy","middleName":"kay","lastName":"Hooi","suffix":""},{"id":583696938,"identity":"11933647-2f67-4e46-a074-313dfe158e14","order_by":3,"name":"Mohammad Omar Faruq","email":"","orcid":"","institution":"Comilla University","correspondingAuthor":false,"prefix":"","firstName":"Mohammad","middleName":"Omar","lastName":"Faruq","suffix":""}],"badges":[],"createdAt":"2025-12-09 09:08:32","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-8315515/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8315515/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":101753058,"identity":"03ab21bc-3703-4629-b40f-4ce4f92cac45","added_by":"auto","created_at":"2026-02-03 10:39:05","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":941396,"visible":true,"origin":"","legend":"","description":"","filename":"Manuscriptv4.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8315515/v1_covered_82ee83c8-3783-42bb-857c-6a113593efe3.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"The Role of Regulatory Capital in Shaping FinTech’s Impact on Bank Intermediation Costs","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"discover-sustainability","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"disu","sideBox":"Learn more about [Discover Sustainability](https://www.springer.com/43621)","snPcode":"","submissionUrl":"","title":"Discover Sustainability","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"stoa","reportingPortfolio":"Discover Series","inReviewEnabled":true,"inReviewRevisionsEnabled":true},"keywords":"Bank intermediation cost, GMM estimation, regulatory capital, fintech, cost inefficiency","lastPublishedDoi":"10.21203/rs.3.rs-8315515/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8315515/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis research examines the influence of Fintech (Financial Technology) and regulatory capital on the bank intermediation cost. 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