Determinants of FinTech Equity Funding Flows: Evidence From a Global Perspective

Abstract

This study explores the factors affecting FinTech (Financial technology startups) equity financing and deals. Traditional and alternative financing are currently progressing together; however, alternative financing remains underexplored. Using panel data from 57 countries in 2010 to 2020 and one‐step difference generalised method of moments (Diff‐GMM) regressions, we show that, at the global level, gross domestic product (GDP), domestic credit to the private sector, regulations, innovations, globalisation, stock market return, information technology (ICT) goods export and internet users influence FinTech equity funding. With respect to FinTech deals, except GDP, regulations and globalisation, all other factors aforementioned have a substantial effect. Nevertheless, our category‐specific findings slightly differ from the global context. Our study emphasises the need for the rapid development of communication technology and increased accessibility to mobile internet services for users. Moreover, authorities should strike a balance between imposing regulations and facilitating FinTech equity funding growth. Innovations should prioritise user‐friendliness, affordability and commercial viability.