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.
Banks, FinTech and stock returns / Carlini, Federico Carlo Eugenio; Del Gaudio, Belinda Laura; Porzio, Claudio; Previtali, Daniele. - In: FINANCE RESEARCH LETTERS. - ISSN 1544-6123. - 45:March(2022), pp. 1-8. [10.1016/j.frl.2021.102252]
Banks, FinTech and stock returns
Carlini, FedericoWriting – Original Draft Preparation
;Previtali, Daniele
Writing – Original Draft Preparation
2022
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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