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FinTechs and the Market for Financial Analysis

Author

Listed:
  • Jillian Grennan

    (Duke University - Fuqua School of Business; Duke Innovation & Entrepreneurship Initiative)

  • Roni Michaely

    (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute)

Abstract

Market intelligence FinTechs aggregate many data sources, including nontraditional ones, and synthesize such data using artificial intelligence to make investment recommendations. Using data from a market intelligence FinTech, we evaluate the relationship between the FinTech data coverage and market efficiency. We find an increase in price informativeness for stocks with higher FinTech coverage and that traditional sources of information have less impact on prices for those stocks. Consistent with FinTechs changing investors' behavior, we show a substitution between traditional information sources and FinTechs using internet click data. Overall, our results suggest the rise in FinTechs for investment recommendations benefits investors.

Suggested Citation

  • Jillian Grennan & Roni Michaely, 2019. "FinTechs and the Market for Financial Analysis," Swiss Finance Institute Research Paper Series 19-10, Swiss Finance Institute, revised Apr 2019.
    • Handle: RePEc:chf:rpseri:rp1910
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    Keywords

    Fintech; FinTechs (financial technology firms); Market intelligence; Artificial intelligence; Aggregators; Social media; Financial blogs; Information and market efficiency; Big data; Machine learning; Datamining; Data signal providers;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O35 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Social Innovation

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