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Banks, FinTech and stock returns

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  • Carlini, Federico
  • Del Gaudio, Belinda Laura
  • Porzio, Claudio
  • Previtali, Daniele

Abstract

This paper investigates the effect of banks' investment in FinTech firms (FTF) on stock returns. We hand-collect data on 581 investment rounds made by FTFs, within at least one European or North American bank acting as investor. Our results show that banks’ investment in fintech affect stock markets. The abnormal reaction is negative, larger for young and technology-oriented firms, and stronger in the case of multiple investments. Bank size, leverage and profitability do not moderate abnormal returns. Overall, our study suggests that bank equity investment in FTFs is an important determinant of abnormal stock returns.

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  • Carlini, Federico & Del Gaudio, Belinda Laura & Porzio, Claudio & Previtali, Daniele, 2022. "Banks, FinTech and stock returns," Finance Research Letters, Elsevier, vol. 45(C).
    • Handle: RePEc:eee:finlet:v:45:y:2022:i:c:s1544612321002348
    DOI: 10.1016/j.frl.2021.102252
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    Cited by:

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    3. Dong, Xueqin & Huang, Lilong, 2024. "Exploring ripple effect of oil price, fintech, and financial stress on clean energy stocks: A global perspective," Resources Policy, Elsevier, vol. 89(C).
    4. Pandey, Dharen Kumar & Hassan, M.Kabir & Kumari, Vineeta & Zaied, Younes Ben & Rai, Varun Kumar, 2024. "Mapping the landscape of FinTech in banking and finance: A bibliometric review," Research in International Business and Finance, Elsevier, vol. 67(PA).
    5. Foglia, Matteo & Maci, Giampiero & Pacelli, Vincenzo, 2024. "FinTech and fan tokens: Understanding the risks spillover of digital asset investment," Research in International Business and Finance, Elsevier, vol. 68(C).
    6. Choudhary, Priya & Thenmozhi, M., 2024. "Fintech and financial sector: ADO analysis and future research agenda," International Review of Financial Analysis, Elsevier, vol. 93(C).
    7. Hong, Liu & Nikbakht, Ehsan & Zhou, Tianpeng, 2023. "Does product market competition affect the adoption of FinTech by non-financial firms?," Finance Research Letters, Elsevier, vol. 54(C).
    8. Hodula, Martin, 2023. "Interest rates as a finance battleground? The rise of Fintech and big tech credit providers and bank interest margin," Finance Research Letters, Elsevier, vol. 53(C).
    9. Del Gaudio, Belinda Laura & Gallo, Serena & Previtali, Daniele, 2024. "Exploring the drivers of investment in Fintech: Board composition and home bias in banking," Global Finance Journal, Elsevier, vol. 60(C).
    10. Zheng, Hao & Mao, Mike Qinghao, 2024. "Fintech mergers and acquisitions," Journal of International Money and Finance, Elsevier, vol. 143(C).
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    13. Hodula, Martin, 2024. "Beyond innovation: Fintech credit and its ripple effects on traditional banking profitability," Finance Research Letters, Elsevier, vol. 63(C).

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    More about this item

    Keywords

    Bank; Fintech; Investment; Event study;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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