Artificial Intelligence and Fintech Disruption in Global Financial Markets: An Empirical Analysis

Abstract

This research examines the disruptive impacts of artificial intelligence (AI) and financial technology (fintech) on financial markets worldwide from 2022 to 2025. We use a mixed-methods research design across 48 advanced and emerging market economies that includes panel data regression, difference-in-differences (DID) estimation, and qualitative case analysis to document that algorithmic trading in the equity market using AI has increased by 34 percentage points from 2020 to now, accounting for 72.4% of daily equity turnover in G7 markets. Our results also show that credit costs for households are 187 basis points lower on average than for traditional bank credit channels, even after controlling for the effects of fintech credit intermediaries. To identify the impact of the adverse AI-related regulatory disclosures on the market liquidity, we use an event-study methodology that employs 214 regulatory announcements from 2024 to 2026. Using an event study methodology applied to 214 adverse AI-related regulatory announcements between 2024 and 2026, we find a statistically significant reduction in the market liquidity within the first 72 hours of the AI disclosure (β = −0.38, p < 0.001). There are also strong signs that central bank digital currencies (CBDCs) are affecting monetary policy transmission mechanisms in jurisdictions experimenting with them. The results have implications for prudential regulators, central banks, institutional investors, and policymakers interested in systemic risk, financial inclusion, and market integrity in a future, algorithmically created financial ecosystem.