•Provide the theoretical analysis of how non-bank fintech affects the effect of targeted monetary policy based on the credit channel theory.•Targeted RRR cuts in China increase the borrowing amounts of micro and small enterprises, but do not change their borrowing costs.•Micro and small enterprises in areas with more non-bank fintech increased the effect of targeted RRR cuts on borrowing amounts, but no change in costs. Since the financial crisis, central banks have implemented unconventional monetary policies, while fintech has developed rapidly and reshaped the credit market. Using firm data from China, this paper empirically tests whether the development of non-bank fintech influences the effect of targeted monetary policy tools. We find that targeted reserve requirement ratio (RRR) cuts in China expand the borrowing amounts of targeted micro and small enterprises (MSEs), but have no effect on their borrowing costs. Moreover, non-bank fintech increases the effect of targeted RRR cuts on MSEs' borrowing amounts, while it does not change the policy effect on borrowing costs.